The National Investment and Infrastructure Fund (NIIF) would be investing Rs 15,000 crore in equity for the marquee Delhi-Mumbai expressway project. This equity investment would be leveraged to raise close to Rs 50,000-crore debt. The total project cost is approximately Rs 70,000 crore and the entire construction risk would be borne by the National Highways Authority of India (NHAI). The arrangement essentially means that the ownership of the project that is planned along the lines of new alignments would be with the NIIF.
It is noted that foreign sovereign funds are willing to co-invest with the NIIF in road projects. Currently, Abu Dhabi Investment Authority (ADIA) is a partner with NIIF, which was formed by the Indian government as a private entity. The Union ministry of road transport and highways would have to seek Cabinet approval for the arrangement. Details like toll collection on the expressway and to whom the proceeds would go to are still being worked out.
The NHAI signed a memorandum of understanding with NIIF for the investment. The proposed Delhi-Mumbai expressway would also be connected to the industrial city of Indore and an arm of the erstwhile Golden Quadrilateral. The partnership would be through formation of a special purpose vehicle. The model would be a funding arrangement for other large-sized road projects, to be executed by NHAI in future. NHAI is raising finances for its mega projects, and is not dependent only upon budgetary support. Several funding models were adopted in the past towards this, which have yielded good results.
The arrangement of innovative alternative sources of funding is being looked into by NHAI to attract international investors and fund houses that are willing to invest in road projects in India. But they are not very keen on taking risk related to the project execution.