Govt to set up an international road construction company

Spreading its presence globally, the ministry of road transport and highways is planning to set up a new company, NHAI International, which will cater to road projects abroad.

The company would be a separate entity and not part of the National Highways Authority of India, or NHAI, road transport minister Nitin Gadkari said in an interaction with Mint. It will work on a revenue model where bank loans would be taken out in US dollars because, at interest rates of 2%, these are cheaper than rupee loans.

“From our experience of shipping, we have realized that till date, we had been dealing loans in Indian rupees due to which we were being charged 12% rate of interest. But this comes down substantially down when the same trading is done in US dollars,” said Gadkari, adding that the same would be applicable in the case of NHAI International.

Once established, NHAI International could take up several projects, such as the planned Bangladesh-Bhutan-India-Nepal road, an undersea tunnel between India and Sri Lanka, and roads to the Chabahar port in Iran. India has been focusing on strengthening road links among South Asian nations.

A senior NHAI official said, “The proposal is still in a draft stage and nothing concrete has materialized yet. It was an idea mooted by the minister as a specialized agency with experts is needed to undertake such international projects.” However, speaking on condition of anonymity, he added that as per their knowledge, the company is going to be a subsidiary of NHAI.

A road ministry official who didn’t want to be named said the company would work as a contractor for neighbouring countries, undertaking construction and consultancy services for Indian and foreign governments’ international projects, such as railway public sector units Rail India Technical and Economic Service (RITES) and Indian Railway Construction Co. Ltd. He added that the company would have several international offices and hire experts from the respective countries too.

The official said, “The minister’s idea is to tap the revenue from these international projects as they are profitable and can bring good foreign exchange to the country. The funding for these projects is no problem at all because the Asian Development Bank is very much interested to sponsor South Asian country connectivity projects.”

At present, the government outsources international road construction work as it does not have any specialized wing to undertake such projects. NHAI’s mandate is to develop and construct national highways within India and it is already overburdened, said the ministry official.

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