NITI Aayog seeks consultant to assess road projects, NHAI operation

With the debt of the National Highways Authority of India (NHAI) exceeding Rs 3 lakh crore and its reliance on government budget support increasing, NITI Aayog has decided to undertake an institutional assessment of the road construction body.

The government think tank Development Monitoring and Evaluation Office (DMEO) launched a tender for the selection of a technical consultant to carry out an evaluation study of road projects and the operation of NHAI.

“In the context of (NHAI’s) growing debt service burden, contingent liabilities, reliance on government budget support and ambitious road and infrastructure development plan, there is a need to better understand NHAI’s performance. and assess its existing practices and finances in order to provide inputs to improve its operation,” the DMEO said in its report.

NHAI’s debt has seen an increase from Rs 23,797 crore in March 2014 to Rs 3.48 lakh crore in March 2022.

The NHAI expenditure in FY22 was partly covered by the government budget allocation which was Rs 57,350 crore and the rest through market borrowing which was Rs 65,000 crore.

“Therefore, NITI Aayog plans to conduct an institutional assessment of the NHAI with an emphasis on its operations, relevance, effectiveness, efficiency and finances, as well as existing policies and decision-making processes,” it added.

According to the DMEO report, the NHAI assessment will be carried out using the Ability, Motivation and External Environment (CME) framework – Relevance, Effectiveness, Efficiency, Financial Feasibility and Sustainability (REEFS).

The aim of the study is to assess the key pillars of performance such as the relevance, effectiveness, efficiency, financial viability and sustainability of NHAI in the context of the external environment, internal motivation and capabilities of the institution, DMEO explained.

The study will also assess the financial viability of NHAI to meet short- and long-term obligations, raise funds efficiently, the existence of diversified revenue streams, the mechanisms in place to mitigate financial risk, and the implementation of processes and practices to planning and forecasting.

The consultants will also assess NHAI’s asset monetization strategy with respect to percentage of revenue from asset monetization, strategy for tranche packages, reasons for successful and unsuccessful packages, and InvITS assessment.

To pay off its debt, NHAI had to spend Rs 31,735 crore in FY23, which was one-fifth of its total spending.

The FY23 budget saw an equity infusion into NHAI, where budget support to NHAI increased by 134 per cent to Rs 1,99,108 crore.

As of March 31, 2020, NHAI had contingent liabilities of Rs 71,765 crore.

NHAI’s key functions are to develop and maintain national highways and to advise the central government on highway-related matters.

The National Highways have a total length of 1,41,190 kilometers. Although they comprise only 2.2 percent of the total length of the country’s highways, they carry more than 40 percent of road traffic.