The Central government has given fresh impetus to the infrastructure sector. In an interview to BTVi , National Highways Authority of India Chairman Raghav Chandra says highway project awards will go up 50-60 per cent in FY17, from 4,400 km awarded in FY16. NHAI is looking to raise $750 million via Green Masala bonds, ₹25,000 crore from LIC and ₹20,000 crore from Employees’ Provident Fund Organisation (EPFO). NHAI is also exploring to raise funds through infrastructure investment trusts (InvITs), possibly with the National Investment and Infrastructure Fund (NIIF). Foreign SWFs (Sovereign Wealth Funds) such as Abu Dhabi Investment Authority and Qatar Investment Authority, along with Canadian pension funds, have shown interest in the new toll-operate-transfer (TOT) projects, he added.

What is the current status of the highways sector?

There has been a tremendous improvement in the past few years, particularly in two years. We have been pushing for dealing with various aspects of highway management, which includes regulation of encroachments and removing them from both sides of the highway, because unless you have free ride-ways and free access to the corridors, you can’t move in the speed you want to. Of course, you need roads, but you require roads which are clear.

The average speed on our roads is 40 km/hr, which in more developed societies goes up to about 60 km/hr. So, our endeavour has been to ensure that highway management is of superior order, which means building roads, ensuring carriage way is available and increasingly regulate traffic on those roads.

One of the significant developments which we have undertaken is electronic tolling. Today, electronic tolling is available across 360 toll plazas and RFID (Radio-frequency identification) tags are freely available. And, we hope to ramp it up further.

The pace of awards of road projects has slowed down in a quarter or so...

The pace of awards is best judged by the year. Last year, we awarded work for about 4,400 km. We hope to be able to award projects for at least 50-60 per cent more this year. We have already bid out projects worth 3,500 km for a total envelope size of about ₹55,000 crore. Out of this, we have already awarded letters of awards (LoAs) for about 1,800 km at a cost of ₹25,000 crore.

A lot of projects are under evaluation. All our bidding is through e-tendering. We take pride in the fact that it is a transparent and safe model of delivery. But, it takes time.

Given the consequences of economic slowdown affecting most companies, what is your assessment of the performance of concessionaires?

It’s a mixed bag. Some reputed companies have performed extremely well. Some have not performed as per our expectations even though their balance sheets are good. Perhaps, they have been distracted into undertaking work on other projects or in other sectors. Our job is to constantly coax, cajole and even coerce them sometimes to emphasise on the road projects they have taken up.

In the past one year, we have devoted more time and tried to bring in more finances for developers who were not taking their projects seriously. We have closely coordinated and cooperated with State governments to resolve issues. There has been a higher level of articulation and communication with all parts of the government at every level to be able to implement some of the schemes that the Cabinet has brought in for reviving some of the languishing projects. We have also established a higher level of communication with banks. We are a just a phone call away from chairmen of banks. In every meeting, we press upon them the urgency because time is of essence.

We had about 40 languishing projects when I joined. Today, we have only 18-19, out of which we have got approval from the NHAI board for at least four, for infusing funds into them. Three SBI-funded projects have already been approved for an equity infusion of ₹1,100 crore. We are infusing ₹350-crore equity in the IDBI-funded Gurgaon-Jaipur highway project.

Some year ago, there was a phase of irrational exuberance and almost every company wanted to bid for road projects, hoping to get high returns on investment. The economic slowdown caused a major problem and there was a backlash on user charges, which shook investor confidence. Have the companies come out of the bad phase or is there still some time needed for repairing their balance sheets?

I think they are on the path of recovery. Some companies such as Tata, IRB and L&T have managed to bring themselves back on board. However, there are companies which are staggering under this load. One of the recent government initiatives — to pay 75 per cent of the amount to be paid to companies that are engaged in legal disputes and had orders in their favour — will ease liquidity and cash flows, and help restore the confidence and encourage them to perform better.

You have been spending your time interacting with the stakeholders in the financial space. I am told that you recently met a clutch of foreign investors with regard to the sector? What concerns were raised?

The key concerns of the foreign investors are whether government support will be enduring, and whether the State governments will also be supportive of the agreement. Our answer on both the issues is: since the Union Cabinet has formulated all these policies in the past so many years, there is a certain definitiveness and stability to the policy.

We have a Model Concession Agreement, which spells out the mutual rights and obligations between the concessionaire and the government. These have passed the test of time. The State governments have also signed what are known as the State Support Agreements, which mandateand enshrine that they have to honour their responsibilities of support at the State level. This also has restored confidence in the system.

However, they are very concerned about the stability of the toll or the user-charge regime. We have had cases where District Collectors or some State governments have made exceptional changes on their own. Those need to be really discouraged.

You also interacted with the foreign investors on the funding requirement. What is the plan going forward?

One of the things which often do not come out is that our overall spending has gone up considerably, largely because of the enhanced focus on construction and project delivery. Last year, our overall spending was 40 per cent more than the previous year. This was further supplemented by private-sector spending, which means more action was happening on the ground on PPP projects.

This year, I further expect spending to go up 50 per cent. Where will the funds come from? We will get our funds from government road cess, the toll receivables which are ploughed back, and we have been allowed to raise ₹59,000 crore through bonds. We have raised some funds from EPFO — we have a window of ₹20,000 crore and have already availed ourselves of ₹10,000 crore. We have a window of ₹25,000 crore from LIC. We have not used that yet, but we hope to do that in the days to come. We are also working on Green Masala bonds — Indian rupee-denominated bonds issued in offshore capital markets. SBI and Nomura are the arrangers. I think in the course of another one-and-half months, we should be able to place them both at Singapore and London Stock Exchanges. We will go for $750 million.

Apart from that, we are also looking at creating an InvIT, which will bundle some of our projects and place them, so that we can raise funds possibly with the help of government’s NIIF. We are also looking at the ToT model, which will allow us to place two-year-old projects in private hands, to raise funds upfront. There is tremendous interest from Abu Dhabi Investment Authority, Qatar Investment Authority and various Canadian funds. I expect it to be quite successful.

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