Armed with permission to issue Rs 10,000 crore (Rs 100 billion) of tax-free bonds in 2011-12, the National Highways Authority of India (NHAI) will issue the first lot worth Rs 2,500 crore by mid-May.
Monday's government Budget proposals ask to allow four of its entities to raise Rs 30,000-crore (Rs 300 billion) of tax-free bonds during the coming financial year.
"We need a lot of money and will go ahead to raise Rs 2,500 crore (Rs 25 billion) as soon as the Finance Bill is passed, which is likely to be in the middle of May. The rest of the money will be raised later during the year," said a senior NHAI official, who did not want to be identified.
The official explained that NHAI had asked the government to allow them to raise money through tax-free bonds, as other organisations involved in this have not been able to meet the market demand.
"Had we not got the permission, we would have gone to the market to raise this amount. But these long-term bonds will be able to reduce our interest rate burden by two percentage points, which is huge," the official said.
"Even if we not need the money this year, we will raise it and keep it for our future needs."
Any project awarded will need 25 per cent of the total project cost in the first year after award and the remaining 75 per cent in the rest two years.
Normally, a road project needs three years to complete. NHAI also raises money through 54EC infrastructure bonds.
It has raised Rs 1,600 crore (Rs 16 billion) this year through 54EC, about Rs 1,200 crore (Rs 12 billion) in 2009-10 and Rs 1,630 crore (Rs 16.3 billion) in 2008-09.
NHAI has plans to construct 35,000 km of highways in the next four to five years, translating into building 20 km of roads a day.
