NHAI’s Asset Monetisation Plan to raise ₹40,000 crores in FY26
- finminati
- Jun 13
- 3 min read
Updated: Jun 21
13 June 2025, Friday
The National Highways Authority of India (NHAI) has released its plans for monetisation of its ‘assets’ i.e. the roadways / highways. Why? Because NHAI needs money to repay old debts and build more roadways without borrowing.
The plan is called the Monetisation of Public Highway Assets Framework.
This is a 3-pillar approach to monetise India’s roadways as an asset.
A Little Bit of History …
In the early 2000s, NHAI used Build-Operate-Transfer (BOT) model, wherein private contractors built the roads, recovered the costs by collecting tolls on those roads over the next 20-30 years and then handed the roads back to the government / NHAI.
But by 2014, this model wasn’t working anymore as toll revenue wasn't enough and land acquisitions were complicated.
BOT contracts fell from 96% of all new road contracts in 2012 to 0% in 2019.
Now, NHAI had to step in to build the roads itself.
It used 2 models:
EPC (Engineering, Procurement, Construction): NHAI pays the full construction cost up front.
HAM (Hybrid Annuity Model): NHAI pays 40% of the project cost during construction, and the rest over time as annuities, while the contractor manages part of the risk.
Compared to BOT, these 2 models were more contractor-friendly. Road building took off again.
But as you can imagine, it cost NHAI a fortune.
NHAI borrowed money to build roads and as a result its debt increased from ₹24,000 crores in 2015 to ₹3.35 lakh crores by 2024.
NHAI's Asset Monetisation
NHAI’s assets: ₹3.5 - 4 lakh crore worth toll-generating highways.
NHAI’s strategy has 3 pillars:
TOT (Toll-Operate-Transfer) model (2019)
NHAI leases future toll revenue in exchange for upfront lump sum payment.
InvIT (Infrastructure Investment Trust) model (2021)
NHAI bundles roads into “trusts”, sells units of these trusts to financial institutions and foreign investors and the investors get a share in the toll revenue.
SPV (Special Purpose Vehicle) model
NHAI creates a separate legal entity (an SPV) for each road project, which then raises money by issuing bonds or borrowing from banks, using future toll revenues as collateral.
These models seem to be working well as NHAI has been able to raise ₹1.4 lakh crores. The proceeds have been used to pre-pay ₹56,000 crores worth loans, saving ₹1,200 crores in interest.
As per the recently announced strategy, every quarter will see:
3 TOT bundles (small, medium and large)
2 InvIT tranches
a public InvIT - for retail investors (new!)
NHAI plans to raise ₹40,000 crores in FY26, by monetising 1,472 km of highways.
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