Rise in premium income reduces borrowing estimate to INR 83,000 crore. With a substantial increase in premium revenue from projects awarded, the National Highways Authority of India’s said that its estimated long-term borrowing requirement has reduced considerably.

The B K Chaturvedi committee, appointed in 2009 to examine the National Highways Development Program and related aspects (it gave its second report last year), had said NHAI would need to raise INR 191,000 crore by 2030-31.

Mr JN Singh member (finance) of NHAI said that “The huge rise in premium income in the recent past has ensured we will have to borrow only INR 83,000 crore, much less than the borrowing plan approved by the Chaturvedi committee. We plan to raise between INR 10,000 crore and INR 15,000 crore for the coming six years.”

A company offering a premium means it is committing to an annual payment to the government over a period of time, instead of seeking a grant for building a road. Companies bid a premium if they are confident that the toll revenue accruing would more than offset their costs.

Mr Singh said they were expecting premium income to increase further in the coming years, as a number of road widening projects (from four-lane to six-lane) is still to be awarded. In the current financial year, it has awarded 21 of 33 projects on a premium. The premium income from these 21 projects would come to around INR 3,000 crore per year and will increase by five per cent every year till the concession period ends.

Of the rest, nine projects were given on a grant and the other two were awarded on annuity payment.

NHAI has said it would award 59 projects covering 7,994 km, with a total cost of around INR 60,000 crore, in 2011-12.

(Sourced from BS)