The National Highways Authority of India (NHAI) has released its first Asset Monetisation Strategy for the Road Sector, aiming to boost capital generation through Public-Private Partnership (PPP) models.

Key Objectives of the Strategy

• Unlock the economic value of operational highways.
• Attract private sector investment to improve efficiency and innovation.
• Ensure a steady stream of funds for infrastructure development without over-relying on traditional budgetary sources.

Three Pillars of the Strategy

• Value Maximisation of Assets: Scientific identification and evaluation of monetisable road assets.
  • Ensures maximum returns through competitive bidding and market-based pricing.
• Transparency & Information Dissemination: Clear frameworks and disclosure of relevant data to investors.
• Market Development & Stakeholder Engagement: Expansion of the investor base.

Monetisation Models Adopted by NHAI

• Toll-Operate-Transfer (ToT):  Long-term leasing of operational toll roads to private players against upfront payment.
• Infrastructure Investment Trusts (InvITs): Allows retail and institutional investors to invest in infrastructure projects and earn returns.
• Securitisation of Toll Revenues: Monetising future cash flows from toll collections by issuing bonds or loans backed by toll receipts.

Asset Monetisation

• Asset Monetisation refers to the process of unlocking the economic value of public sector assets by involving private sector investment and participation.
• It means converting idle or underutilized public assets into sources of revenue, typically through models like lease, concession, or investment trusts.
• Example: NHAI leasing operational highways to private players under the ToT model is a classic case of asset monetisation.
• Purpose:
• • Raise capital for new infrastructure projects.
  • Improve efficiency in asset management.
  • Reduce burden on public finances.

Significance of Asset Monetization in India’s Road Sector

• Funds for New Infrastructure: Over ₹1.4 lakh crore already mobilised from 6,100+ km of national highways under the National Monetisation Pipeline (NMP).  
• Reduces Government Debt: Shifts maintenance costs to private players, cutting fiscal burden.  
• Boosts Private Investment: Encourages PPP through models like TOT, InvITs, attracting global investors (e.g., Brookfield, Macquarie).  
• Improves Road Quality & Tech; Private operators bring better maintenance, tech, and efficiency, enhancing road longevity.  
• Ensures Transparency & Trust: Structured framework with clear valuation and investor-friendly processes.  
• Supports Sustainable Growth: Aligns with India’s 2025-30 Monetisation Plan, ensuring long-term financing for highways.  

Challenges in Asset Monetization of Road Sector

• Underbidding & Low Investor Interest: Private players may offer lower-than-expected bids in TOT (Toll-Operate-Transfer) auctions, reducing revenue potential.  
  • Economic slowdowns or policy uncertainties can also deter investor participation.  
• Regulatory & Legal Hurdles: Land acquisition disputes, environmental clearances, and contract enforcement delays can slow down monetization.  
  • Frequent changes in tolling policies or tax structures create uncertainty for investors.  
• Asset Quality & Maintenance Risks: Poor condition of some highways reduces their monetization appeal.  
  • As per a CAG Report (2023), nearly one fourth of NHAI’s road assets identified for monetisation required major rehabilitation, impacting investor confidence.
• Market & Financial Risks: Fluctuations in traffic volumes (due to economic conditions or alternate routes) affect toll revenues.  
  • Rising interest rates make financing costlier for private players, reducing their willingness to invest.  
• Public Resistance & Political Opposition: Toll hikes or privatization of highways can trigger public backlash.  
  • State governments may oppose central-led monetization of key routes due to political or regional concerns.  
• Limited Investor Base for New Models: Instruments like InvITs (Infrastructure Investment Trusts) require deep capital markets, which are still developing in India.  

Way Forward

• Expand & Diversify Monetization Models: Scale up innovative models like InvITs (Infrastructure Investment Trusts) and TOT (Toll-Operate-Transfer) while exploring hybrid structures (e.g., securitization, SPVs).  
• Strengthen Investor Confidence Through Transparency: Implement standardized asset valuation, clear contract terms, and real-time performance tracking via an Asset Monetisation Dashboard (proposed in Budget 2021-22)  
  • The Delhi-Noida Direct Flyway TOT succeeded because of transparent bidding, fetching $1.45 billion.
• Optimize Concession Periods & Risk-Sharing: Offer flexible tenures (e.g., 20–30 years) and revenue-sharing mechanisms to balance investor returns and public interest.  
• Prioritize High-Traffic Corridors & Tech Integration: Monetize high-density routes (e.g., Delhi-Mumbai Expressway) and integrate FASTag, RFID, and AI-based tolling to boost revenue.  
• Establish Robust Dispute Resolution Mechanisms: Fast-track arbitration and adopt NITI Aayog’s proposal to bring InvITs under the Insolvency and Bankruptcy Code (IBC).  
  • Delays in land acquisition and toll disputes (e.g., Pune-Mumbai Expressway) have stalled projects.  

Conclusion

NHAI’s strategy marks a paradigm shift in infrastructure financing, promoting transparency, private investment, and efficient asset management. As an early adopter of innovative monetisation mechanisms, NHAI is setting a precedent for sustainable infrastructure development across India.

DOWNLOAD PDF