NHAI Headquarters
Headquarters of the NHAI at Sector 10, Dwarka in New Delhi, India. Credit: Trinidade.

The National Highways Authority of India (NHAI) is in discussions with the State Bank of India (SBI) to monetise road projects that are experiencing high volumes of traffic.

The announcement is part of the NHAI plans to explore various modes to meet its Rs750bn ($10.8bn) funding requirement for the current fiscal year, reported the Economic Times.

A government official was quoted by the Economic Times as saying: “The idea is, instead of monetising assets to private players, we get the money directly from banks.

“The only difference is in TOT (toll-operate-transfer), we are giving it to funds with maintenance and toll collection obligation. SBI, being a bank, will be giving loan to NHAI, which will be paid back through a special purpose vehicle (SPV), or through specific project requirements.”

It is similar to toll securitisation, the official added.

Road transport and highways minister Nitin Gadkari recently said that he was in talks with a ‘big bank’ to monetise nearly 50 projects of NHAI to raise Rs500bn ($7.25bn). However, Gadkari did not reveal any further details.

Earlier this month, National Investment and Infrastructure Fund (NIIF) signed an agreement with the NHAI for financing large road projects.

Under the agreement, NIIF and the NHAI will form a special purpose vehicle (SPV) to execute fund arrangements for potential road projects, undertaken by the NHAI.

Last week, Life Insurance Corporation of India (LIC) agreed to extend Rs300bn ($4.35bn) line of credit to the NHAI to fund new road projects in the country.

The decision to borrow money was taken after the Highways Ministry faced difficulties in arranging funds beyond the budgetary provision of Rs366.9bn ($5.32bn) for the financial year 2020.