NHAI to raise Rs100 billion through infrastructure bonds

24 Nov 2011


National Highways Authority of India (NHAI) has plans to raise up to Rs100 billion through the sale of tax-free infrastructure bonds to retail investors next month.
G Suresh, chief general manager for finance said the sale should be in the second week of December, InidaInfoline, citing unnamed sources said.
The NHAI bonds would offer 10-year and 15-year maturities to investors, he said according to IndiaInfoline.
AK Capital Services Ltd, ICICI Securities Ltd, Kotak Mahindra Capital Co and SBI Capital Markets Ltd would be lead managers for the sale, he was quoted as saying.

Meanwhile, the NHAI has garnered over Rs2,000 crore as premium from the award of highway projects in the current financial year and to the surprise of the authorities, the non-descriptive stretches had fetched hefty premium.

Analysts say the highways sector is seen to be emerging as a sunrise sector with the Indian economy now under the grip of a slowdown.
Over the last week, the NHAI opened bids for six projects and all of them had gone at premia, totalling Rs369 crore against the government's projection of paying financial grant to make these projects viable.

In case of projects that  went for premium, the developer raises finances and pays an annual up-front amount to the NHAI.
Usually, the developers quote a premium, considering likely increase in traffic on specific roads on the basis of observed trend.
So far, the authority had been granted Rs2,012 crore as premium from private developers from 19 projects and according to NHAI officials, this could touch Rs2,500 crore during the current financial year.

The annual premium amount would increase by 5 per cent every successive year during the entire concession period, of at least 20 years.
Yesterday, the highest bidder for 93km stretch of Rampur-Kathgodam stretch of NH-24 and NH-87 in UP and Uttarakhand quoted a premium of Rs34 crore, while the authority had expected to provide financial grant for the four-laning.
Additionally, what has surprised the NHAI officials was the high number of bidders for most of the projects it had floated in recent times.

To their amazement, infrastructure majors like L&T quoted premium of Rs81 crore for the four-laning of the 145 km between Maharashtra/ Karnataka border and Sangareddy at a cost of Rs1,318.66 crore.
The case was no different from that of the 160km corridor between Etawah and Chakeri (Kanpur), where Oriental Structural Engineers had quoted Rs85 crore as premium.

According to sources, the developers seemed to be going for higher premium expecting a quantum jump in traffic on such stretches.

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