NEW DELHI : All future operational road projects will be offered for bids by infrastructure investment trusts (InvITs) in a fresh proposal for road monetization, road transport and highways secretary Giridhar Aramane told Mint.
About ？2,000 crore– ？2,500 crore worth of operational highways laid by the National Highways Authority of India (NHAI) would be put for bidding exclusively by InvITs next month where all infra trusts, including the authority’s own subsidiary NHAI InvIT, can place their valuation for NHAI’s assets.
“This will test how NHAI’s road assets are valued by InvITs promoted by various infrastructure companies. Under the process, even NHAI InvIT will have to participate in the bidding process to bag road assets rather than getting it from its parent under any form of nomination," Aramane said.
NHAI launched its InvIT in October last year, with the aim of mopping up ？5,100 crore, as part of the government’s long-term plans to monetize road assets. The InvIT bagged five toll roads of 390 km spread across Rajasthan, Gujarat, Telangana and Karnataka. These road assets had an enterprise value of ？8,000 crore. So far, NHAI has raised about ？7,000 crore– ？8,000 crore from InvITs.
NHAI officials said that NHAI InvIT plans to raise more than ？20,000 crore through follow-up offerings. So far the government has permitted NHAI to bid out completed road projects under the toll operate transfer (ToT) model that has received a good response from investors and helps NHAI to get upfront payment on its projects. “InvIT is a medium that is available to us to monetize. But NHAI should not have a monopoly under this instrument. It cannot say that all projects being monetized be transferred to its infra trust alone. I must be able to sell all my assets in an open option and transfer it to whoever gives the best. NHAI InvIT can also participate in the auction and then issue its units to the public," Aramane said.
Infrastructure investment trusts, or InvITs, are collective investment vehicles similar to mutual funds, which enable direct monetary investment from individual and institutional investors in infrastructure projects which earn them a small portion of the income. InvITs typically enable developers of infrastructure assets to monetize assets by pooling multiple assets under a single entity (trust structure).
Such infrastructure trusts are popular among investors, especially in the case of long-term revenue-generating assets such as toll roads as they help provide stable and long-term yields.
MINT PREMIUM See All
Premium For NHAI, the future is in InvITs
Premium The quiet gainers of the crude oil spike
Premium End in sight for Indian IT's Australian woes?
Premium Is it time to start covid shots for babies?
Leading InvITs registered under Sebi include Brookfield sponsored India Infrastructure Trust; MEP Infrastructure Investment Trust; IRB InvIT Fund; Tower Infrastructure Trust; and IndInfravit, sponsored by L&T Infrastructure Development Projects. Now all these InvITs would be invited to participate in the bids for NHAI’s operational projects under the new monetization exercise. NHAI has a project bank of 20,000 km of completed roads. The authority is offering these roads in bundles and will be offering projects worth ？40,000 crore in the next two financial years.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!