The national highways building authority is in talks with Life Insurance Corporation of India (LIC) to raise around Rs. 25,000 crores through sale of bonds this financial year, as part of its long-term funding arrangement with the insurer, a senior official said.
“We are in talks with LIC to raise around Rs 25,000 crores this financial year,” NHAI chairman NN Sinha told reporters on the sidelines of an event here on Friday.
NHAI and LIC have held preliminary discussions on the funding arrangement, Sinha said.
“In fact, LIC has agreed to fund at the current subscription for the next 5 years,” Sinha told ET.
The maturity period of the bonds will be for 30 years, and the coupon rate is yet to be worked out, Sinha said.
ET reported on Friday that the national highways authority is tapping state-owned Life Insurance Corporation of India (LIC) for funding of around Rs 30,000 crore in the current financial year.
The move comes as the highways ministry faces stiff targets to raise funds outside of the budgetary allocation of Rs 36,691 crore for FY 20.
NHAI chairman NN Sinha had recently said that the authority plans to raise Rs 75,000 crore from the market this financial year.
NHAI has in the past sold its AAA-rated bonds to the state-owned insurer, keeping with its plans to raise around Rs 1 lakh crore from LIC. The authority raised around Rs 13,500 crores through sale of long-term maturity bonds in two tranches to LIC in 2017. In June 2018, NHAI raised Rs 2,000 crores from the insurer.
While the monetisation of road assets through Toll-Operate-Transfer (TOT) model remains a solid mode of funding for NHAI, the deal with LIC will instill confidence in the roads sector and help meet NHAI its funding plans significantly.
Source: Economic Times