With roads at the centre of infrastructure development, the National Highways Authority of India’s (NHAI’s) decision to tap funds through innovative methods brings hopes of new orders for developers. Apart from policy logjam and clearances for smooth project execution that’s being put in place, steady fund flow is another challenge in infrastructure. Union minister Nitin Gadkari’s statement of coming out with an initial public offering, or IPO, of NHAI would be a giant leap in providing funds to a sector that is heavily reliant on budgetary support. But that maybe some time away. In the near term, NHAI hopes to mop up about Rs.6,000 cr. (in the first round) by auctioning existing road projects under the toll-operate-transfer (TOT) model. The TOT model will bring in direct participation by insurance and private equity firms that have access to cheap funds. NHAI’s dynamic funding approach is also mirrored in its switch from engineering-procurement-construction (EPC) to the more recent hybrid annuity model (HAM).

(Live Mint)