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NHAI will issue Rs 5k crore bonds for senior citizens in February to fund Bharatmala

NEW DELHI: The National Highways Authority of India (NHAI) w..

NEW DELHI: The National Highways Authority of India (NHAI) will launch its first retail bond issue in February.

The authority is looking to tap into the retirement savings of senior citizens to raise around Rs 5,000 crore in the first tranche that would be spent towards the government's ambitious Bharatmala highway construction programme, a senior government official said. NHAI chairman Deepak Kumar said the organisation was in the process of getting approvals from all authorities for the bond sale.

"The retail issue is likely to come in February," he told ET, but refused to comment on the size of the issue and the interest rate that it would offer.

The government official, who spoke to ET on the condition of anonymity, however said NHAI was likely to offer a coupon rate of around 7.5% on 10-year bonds to senior citizens and 7.25% to others. It is still not clear whether the bonds would enjoy tax benefits or not, this official added. In November, NHAI's board had cleared a proposal to raise funds by selling retail bonds to senior citizens and pensioners.

The authority has plans to raise a total of Rs 59,000 crore through bond issues, including masala bonds, this fiscal year that ends in March.

It has already raised more than Rs 25,000 crore from Life Insurance Corporation of India and the Employees' Provident Fund Organisation (EPFO) and is also looking to raise another Rs 7,000 crore in two tranches through masala bonds. "All these things are in the pipeline and we'll raise funds as per our requirements," Kumar said.

"In the current financial year, NHAI would be constructing more than 4,000 km (of roads) and award construction contracts for around 10,000 km."

The road transport and highways ministry implements its projects through different agencies including NHAI and the National Highways and Infrastructure Development Corporation. The ministry also funds state governments to undertake national highway construction works through their public works departments.

The funds raised by NHAI will be used for projects announced under the Bharatmala highway development programme that includes construction of around 35,000 km of highway by 2022 at an estimated cost of Rs 5.35 lakh crore.

In the current financial year, the government is expecting to construct a little less than 10,000 km, which is less than the target set by road transport and highways minister Nitin Gadkari.

In April this year, Gadkari had said he had set a target of constructing 40 kms of highways a day (annual target of about 15,000 km) for his officials.

In fiscal 2017, the roads ministry had constructed 8,231 km of national highways.

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