NHAI's asset monetization plan for roads: There is a lot at stake

Its strategy for using existing assets to fund new roads is impressive but implementation will be key

- SURESH GOYAL

Just over a decade, India's national highway network has doubled to 146,000km, connecting almost every corner of the country. Since capital expenditure by the government on infrastructure such as roads has an income multiplier effect of up to four times, the construction of national highways has multifold social and economic benefits for the country.

Given the increasing need for funds to sustain project growth, the National Highways Authority of India (NHAI) has adopted several asset monetization strategies that leverage existing roads to generate funds. Asset monetization refers to the unlocking of value from existing infrastructure assets by transferring their operational rights to private entities for a specified duration.

This strategy represents a paradigm shift from traditional financing models and creates a virtuous cycle of development, stabilization and monetization of public assets by attracting private investments. NHAI has raised about ₹1.4 trillion through three modes of asset monetization: Toll-operate-transfer (TOT), an infrastructure investment trust (InvIT) and securitization.

For this, it has been able to tap the vast and growing pool of long-term capital available with foreign sovereign wealth funds, pension funds and insurance companies. It has also drawn back into the infrastructure sector domestic investors whose confidence had been shaken by the 2018 IL&FS meltdown.