NITI Aayog seeks consultant to evaluate the operation of NHAI

15 May 2023 CW Team

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

"In the context of its (NHAI's) increasing debt servicing burden, contingent liabilities, dependence on government budgetary support, and ambitious highway and infrastructure development plan, there is a need to better understand the performance of NHAI and evaluate its existing practices and finances in order to provide inputs in improving its functioning," the DMEO said in it's report.

The debt of the NHAI has grown from Rs 237.97 billion in March 2014 to Rs 3.48 lakh crore in March 2022.

NHAI's spending in FY22 was partially funded by the government's annual allocation of Rs 573.5 bn, with the remainder funded by market borrowings totaling Rs 650 billion.

''Therefore, NITI Aayog plans to conduct an institutional evaluation of NHAI with the focus on its operations, relevance, effectiveness, efficiency and finances, as well as existing policies and decision making processes,'' it added.

The NHAI will be evaluated using the capacity, motivation, and external environment (CME)- relevance, effectiveness, efficiency, financial viability, and sustainability (REEFS) framework, according to the DMEO study.

The study's goal is to evaluate key performance pillars such as relevance, effectiveness, efficiency, financial viability, and sustainability of NHAI in the context of the external environment, internal motivation, and institutional capacities, according to DMEO.

The study will also analyze NHAI's financial viability to meet short- and long-term liabilities, efficiently raise funds, the existence of diverse revenue streams, measures in place to manage financial risk, and having processes and practices in place for planning and forecasting.

Consultants will also evaluate NHAI's asset monetisation strategy in terms of the percentage of revenue generated by asset monetisation, the strategy for bundling stretches, the reasons for successful and unsuccessful bundles, and the assessment of InvITS.

In FY23, NHAI had to spend Rs 317.35 billion to service its debt, accounting for one-fifth of its overall expenses. The FY23 budget included an equity investment into NHAI, with financial support to NHAI increasing by 134% to Rs 1991.08 billion.

NHAI had contingent liabilities of Rs 717.65 billion as of March 31, 2020.

The NHAI's primary functions are to create and maintain national highways, as well as to advise the central government on highway-related issues.

The National Highways are 1,41,190 kilometers long in total. Despite making up only 2.2% of the nation's total road length, they transport more than 40% of all traffic.

With the National Highway Authority of India's (NHAI) debt over Rs 3 lakh crore and its reliance on government budgetary support growing, the NITI Aayog has decided to conduct an institutional assessment of the highway construction authority. The Development Monitoring and Evaluation Office (DMEO) of the government think tank has issued a tender for the selection of a technical consultant to perform an evaluation study of road projects and the operation of the NHAI. In the context of its (NHAI's) increasing debt servicing burden, contingent liabilities, dependence on government budgetary support, and ambitious highway and infrastructure development plan, there is a need to better understand the performance of NHAI and evaluate its existing practices and finances in order to provide inputs in improving its functioning, the DMEO said in it's report. The debt of the NHAI has grown from Rs 237.97 billion in March 2014 to Rs 3.48 lakh crore in March 2022. NHAI's spending in FY22 was partially funded by the government's annual allocation of Rs 573.5 bn, with the remainder funded by market borrowings totaling Rs 650 billion. ''Therefore, NITI Aayog plans to conduct an institutional evaluation of NHAI with the focus on its operations, relevance, effectiveness, efficiency and finances, as well as existing policies and decision making processes,'' it added. The NHAI will be evaluated using the capacity, motivation, and external environment (CME)- relevance, effectiveness, efficiency, financial viability, and sustainability (REEFS) framework, according to the DMEO study. The study's goal is to evaluate key performance pillars such as relevance, effectiveness, efficiency, financial viability, and sustainability of NHAI in the context of the external environment, internal motivation, and institutional capacities, according to DMEO. The study will also analyze NHAI's financial viability to meet short- and long-term liabilities, efficiently raise funds, the existence of diverse revenue streams, measures in place to manage financial risk, and having processes and practices in place for planning and forecasting. Consultants will also evaluate NHAI's asset monetisation strategy in terms of the percentage of revenue generated by asset monetisation, the strategy for bundling stretches, the reasons for successful and unsuccessful bundles, and the assessment of InvITS. In FY23, NHAI had to spend Rs 317.35 billion to service its debt, accounting for one-fifth of its overall expenses. The FY23 budget included an equity investment into NHAI, with financial support to NHAI increasing by 134% to Rs 1991.08 billion. NHAI had contingent liabilities of Rs 717.65 billion as of March 31, 2020. The NHAI's primary functions are to create and maintain national highways, as well as to advise the central government on highway-related issues. The National Highways are 1,41,190 kilometers long in total. Despite making up only 2.2% of the nation's total road length, they transport more than 40% of all traffic. See also: 10,000 km of Digital Highways to be developed by NHAI by 202510,331 km of national highways will be built in 2022-2023

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