The revenues from Infrastructure Investment Trusts (InvITs) are allocated for the repayment of NHAI’s debt in accordance with directions from the Government of India. Through InvIT, ₹15,700 crore was raised for the prepayment in FY 2023–2024. In order to further lower its debt to about ₹3,00,000 crore by the conclusion of the fiscal year, NHAI intends to monetise projects worth ₹15,000 to 20,000 crore via InvIT during FY 2024–25.
NHAI Reduces Debt by ₹15,700 Cr Through Pre-payment
The National Highways Authority of India (NHAI) has successfully reduced its debt burden by ₹15,700 crore through a strategic pre-payment initiative. This move is part of NHAI’s broader financial management strategy aimed at improving fiscal stability and reducing interest costs.
Debt Reduction Strategy
NHAI’s decision to pre-pay a significant portion of its outstanding debt aligns with its goal of optimizing financial resources. The key factors behind this pre-payment include:
- Revenue Growth from Toll Collections: Increased toll revenue from national highways has provided surplus funds for debt servicing.
- Government Support and Capital Infusion: Financial backing from the government allowed early repayment without disrupting ongoing infrastructure projects.
- Monetization of Assets: Successful asset monetization through the Toll-Operate-Transfer (TOT) model and InvITs contributed to liquidity.
Financial Implications
The pre-payment of ₹15,700 crore is expected to yield multiple financial benefits, such as:
- Lower Interest Burden: Reduction in overall interest costs will enhance NHAI’s financial health.
- Strengthened Credit Profile: Improved debt-to-equity ratio can lead to better credit ratings and easier access to future funding.
- Sustainable Infrastructure Development: More efficient fund allocation will support long-term highway development and maintenance.
Impact on Infrastructure Growth
With reduced debt pressure, NHAI can focus more on:
- Accelerating Highway Construction: Funds saved from interest payments can be redirected toward faster project execution.
- Enhancing Road Quality: Improved financial stability allows greater investment in maintenance and technology-driven solutions.
- Boosting Private Sector Participation: Stronger financial health will encourage more private investment in highway infrastructure.
Future Plans and Roadmap
NHAI is expected to continue its prudent financial management approach by:
- Exploring Further Debt Reduction: Identifying additional opportunities for loan pre-payment.
- Expanding Asset Monetization: Leveraging TOT and InvIT models for enhanced liquidity.
- Implementing Cost-Effective Financing: Adopting low-interest financial instruments to sustain long-term growth.
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