EPFO in talks with NHAI to enhance funding for road projects

The NHAI is in talks with EPFO, which is looking to invest longterm funds in the road sector, two people aware of the matter said.

Agencies
NHAI is already in talks with State Bank of India (SBI) for funding against toll revenue.
NEW DELHI: Retirement fund body Employees’ Provident Fund Organisation (EPFO), which burnt its hands with investments in IL&FS and Dewan Housing Finance Corporation Ltd, has initiated talks with National Highways Authority of India (NHAI) to enhance funding for highways.

While EPFO has already invested around Rs 10,000 crores via NHAI bonds this year, executives from the retirement fund body met highways minister Nitin Gadkari recently and evinced interest in enhancing the corpus, an official said.

The NHAI is in talks with EPFO, which is looking to invest longterm funds in the road sector, two people aware of the matter said.


Officials from EPFO met road transport and highways minister Nitin Gadkari recently and expressed their inclination to enhance funding to NHAI, a source closely associated with the development told ET.

“They are looking to invest a larger amount now, given they have a huge appetite to invest,” the official added.

EPFO had invested about Rs 1,300 crore in DHFL bonds five years ago and has now sought early redemption of about Rs 600 crore worth of DHFL bonds floated from the cash-strapped housing finance company.
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EPFO is also struggling to recover Rs 574 crore of its bond investments in crisis-ridden shadow lender Infrastructure Leasing & Financial Services (IL&FS).

NHAI and the retirement funds body were in talks for funding last year but it didn’t fructify because of lack of consensus on the interest rates, said the first person quoted above.

“This year also EPFO has been investing in bonds which we have been floating through the exchange. The meeting was held to explore more options which can be looked at. We are trying to see on a long-term basis how can EPFO fund us. They have a huge appetite,” the official added.

NHAI is expected to meet EPFO soon to firm up the size of funding, the official said.
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Given the common sources of long-term funding in the rest of the world are sovereign and pension funds, India should also depend on the likes of LIC and EPFO for meeting its long-term funding needs, said Vinayak Chatterjee, chairman, Feedback Infra. “If the loans are secured specifically against operating assets, the serviceability of the loan and the risk comes down significantly. Gradually, lending has to move towards projectisation,” Chatterjee said.

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NHAI is already in talks with State Bank of India (SBI) for funding against toll revenue. ET reported on July 23 that NHAI is looking to monetise highway projects with high traffic density to the state-owned lender. Sources said that the size of the funding could be to the tune of Rs 30,000 crore or more. NHAI is also in talks with LIC to raise funds to the tune of Rs 25,000 crore in the current financial year through sale of longterm maturity bonds.
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