The National Highways Authority of India (NHAI) is unlikely to go ahead with the proposed Rs 10,000 crore tax-free bond issue in the current fiscal after the road transport ministry asked them not to go ahead with the issue.
The red flag from the roads ministry has come after the finance ministry had expressed concerns over the inability of the highways authority to fully utilise the money raised through tax-free bonds in the last fiscal.
NHAI had raised Rs 10,000 crore through tax-free bonds in 2011-12 but could not utilise full funds owing to slow pace of awards. The authority also had permission to raise Rs 10,000 crore in the current fiscal but that is unlikely to happen.
The ministry (road transport) is against us going ahead with the bond issue and it is highly unlikely that we will go ahead with it. But, going ahead, not raising money in the current fiscal will tighten our funding for projects, said a senior NHAI official.
The official added that in the next four years the authority will have an outlay of around Rs 60,000 crore and they need to start raising funds towards it.
Our plan is to award around 12,000 km length of projects on Engineering Procurement Contract in the next three years. Apart from that, we do not see our projects going on premium anymore and that will further constraint our finances. No less than Rs 60,000 crore will be required in the next three to four years. This tax-free issue would have helped but now we will have to borrow it from banks, which will be at a higher interest, said the official.
Due to project award in a slow pace, NHAI has been forced to park about Rs 8,500 crore of the Rs 22,000 crore raised through various sources since 2011-12.
The road transport ministry and NHAI, which had a target of awarding 9,500 km of road projects, has now brought it down to 4,800 km. After awarding a record 8,000 km of projects in the last fiscal, there has been a slowdown in project award, with only 2,500 km being awarded till the end of December 2012.