NHAI plans to partially fund land acquisition through land monetisation

Land acquisition process in India is a hefty method that involves a lot of stakeholders. The National Highways Authority of India (NHAI) board has recently presented a plan to monetise its land parcels as well as highways. According to a report, the monetisation will be done to partially fund the huge land acquisition costs for building roads.

As per the plan, the highway projects near urban areas will have highway influence zone. This zone will be identified at a distance of 500 meters on either side of the highway.

Besides, from the transactions recorded in that particular influence zone, a part of that will go into an escrow account. This amount will be used to fund the land cost.

“That is an arrangement we are trying to work out with the states to optimise the land expenditure which we are incurring. We are going to apply the policy this year in some of the projects where value capture will become a key component of our financing policy,” Ashish Sharma, Member (Finance) NHAI told investors during a roadshow on Monday.

As land was becoming a major component of NHAI’s total expenditure, monetisation of land has become a necessity. As mentioned by Sharma, during the two initial years of Bharatmala Programme, the expenditure on land was more than the expenditure on civil construction.

“Land was a major drain. Whenever a highway is constructed, the real beneficiary is the particular state and NHAI as such is realising only on tolling so that is not the best way forward (sic.),” Sharma further said.

Also, highlighting NHAI’s new revenue increasing solutions, Nitin Gadkari, Minister of Road Transport and Highways said, “In all the new express highways, we have provisions for making road-side amenities. But, our policy was wrong because we decided to make it on 60 acres. Now, we have reduced it to small parcels of 10-12 acres, out of which one acre of land is reserved for petrol pumps.”

The Minister also mentioned that they are going for tendering wherein the land belongs to NHAI and petrol pumps will be belonging to someone else. According to him, NHAI is planning to start around 700-800 petrol pumps in 2-3 year. This will help generate income from diesel, petrol, LNG and other things, which will, in turn, be adding to the income of the roads.

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