OVERVIEW OF NHAI

NHAI Establishment
The National Highways Authority of India was constituted by an act of Parliament, the
National Highways Authority of India, 1988. It is responsible for the development,
maintenance and management of National Highways entrusted to it and for matters
connected or incidental thereto. The Authority was operationalized in February 1995 with the
appointment of full time Chairman and other Members.
NHAI Mandate
1) Primary mandate is time and cost bound implementation of National Highways
Development Project (NHDP) through host of funding options including from external
multilateral agencies like World Bank, Asian Development Bank, JBIC etc. Work mainly
comprises of strengthening and 4/6 laning of high-density corridors around 13,146 kms
The components are
Golden Quadrilateral 5,846 kms connecting Delhi-Kolkata-Chennai-Mumbai.
North-South-East-West Corridor 7,300 kms connecting Kashmir to
Kanyakumari and Silchar to Porbandhar.
2) Providing Road connectivity to major ports.
3) Involving the private sector in financing the construction, maintenance and operation of
National Highways and wayside amenities.
4) Improvement, maintenance and augmentation of the existing National Highways network.
5) Implementation of road safety measures and environmental management.
6) Introducing Information Technology in Construction, maintenance and all operation of
NHAI.
NHAI Organization
A full time Chairman heads NHAI. Member Finance, Member Administration, Member
Technical head their respective departments and report to the Chairman. A detailed
organization chart of NHAI is given in Figure 1.1.
National Highway Development Program (NHDP)
The National Highways have a total length of 66,590 km to serve as the arterial network of
the country. The development of National Highways is the responsibility of the Government
of India. The Government of India has launched major initiatives to upgrade and strengthen
National Highways through various phases of National Highways Development Project
(NHDP) presented in Figure 1.2. National Highway Development Program is envisaged to
plan, design and construct a network of world class highways to support the economic
growth of the country. Infrastructure in India has been found to be a bottleneck/speed breaker
for the trade and business, poverty alleviation and economic growth of the country.
Advantages of providing well developed network of highways are as follows
Savings in vehicles operating costs by reduced fuel consumption and maintenance
costs
Travel time savings by faster and comfortable journeys
Safer travel
Benefits to trade especially in movement of perishable goods.
Reduce demographic shift to urban areas
Poverty alleviation and all round development of areas
NHDPs focus is on developing International standard roads with facilities for uninterrupted
flow of traffic with:
Enhanced safety features
Better Riding Surface
 Better traffic management and noticeable signage
Divided carriageways and service roads
Grade separators
Over bridges and Underpasses
Bypasses
Wayside amenities
National Highways Development Project is being implemented in 6 phases, which are briefly
as under:
NHDP Phase I : NHDP Phase I was approved by Cabinet Committee on Economic Affairs
(CCEA) in December 2000 at an estimated cost of Rs.30,000 crores comprises mostly of GQ
(5,846 km) and NS-EW Corridor (981 km), port connectivity (356 km) and others (315 km).
NHDP Phase II : NHDP Phase II was approved by CCEA in December 2003 at an estimated
cost of Rs.34,339 crores (2002 prices) comprises mostly NS-EW Corridor (6,161 km) and
other National Highways of 486 km length, the total length being 6,647 km. The total length
of Phase II is 6,647 km.
NHDP Phase III : Government approved on 5.3.2005 upgradation and 4 laning of 4,035 km
of National Highways on BOT basis at an estimated cost of Rs.22,207 crores (2004 prices).
Government approved in April 2007 upgradation and 4 laning at 8074 km at an estimated
cost of Rs.54, 339 crores.
NHDP Phase IV : With a view to providing balanced and equitable distribution of the
improved/widened highways network throughout the country, NHDP-IV envisages
upgradation of 20,000 kms of such highways into two-lane highways, at an indicative cost of
Rs.27,800 crore. This will ensure that their capacity, speed and safety match minimum
benchmarks for national highways.
NHDP Phase V: CCEA has approved on 5.10.2006 six laning of 6,500 km of existing 4 lane
highways under NHDP Phase V (on DBFO basis). Six laning of 6,500 km includes 5,700 km
of GQ and other stretches.
NHDP Phase VI: CCEA has approved on November 2006 for 1000 km of expressways at an
estimated cost of Rs.16680 crores.
Finance Mechanisms: NHAI proposes to finance its projects by a host of financing
mechanisms. Some of them are as follows:
1. The Government of India Budgetary Allocation
In a historic decision, the Government of India introduced a Cess on both Petrol and Diesel.
This amount at that time (at 1999 prices) came to a total of approximately Rs.2, 000 crores
per annum. Further, Parliament decreed that the fund so collected were to be put aside in a
Central Road Fund (CEF) for exclusive utilization for the development of a modern road
network. The developmental work that it could be tapped to fund, and the agencies to whom
it was available were clearly defined as:
Construction and maintenance of state highways by state governments
Development of rural roads by state governments
Construction of Rail Over Bridges by Indian Railways.
Construction and Maintenance of National Highways by NHDP and Ministry of Road
Transport & Highways.
Today, the Cess contributes between Rs.5 to 6 Thousand crores per annum towards NHDP.
2. Loan Assistance from International Funding Agencies
Loan assistance is available from multilateral development agencies like Asian Development
Bank and World Bank or Other overseas lending agencies like Japanese Bank of
International Co-operation.
3. Market Borrowing
NHAI proposes to tap the market by securities cess receipts.
4. Private Sector Participation
Major policy initiatives have been taken by the Government to attract foreign as well as
domestic private investments. To promote involvement of the private sector in construction
and maintenance of National Highways, Projects are offered on Build, Operate and Transfer
(BOT) basis to private agencies. After the concession period, which can range up to 30 years,
this road is transferred back to NHAI by the Concessionaires. NHAI funds are also leveraged
by the setting up of Special Purpose Vehicles (SPVs). The SPVs borrow funds and repay
these through toll revenues in the future. Some more models have emerged for better
leveraging of funds available with NHAI such as Annuity, which is a variant of BOT model.
Government Policy Initiatives
Policy Initiatives for Attracting Private Investment
Government will carry out all preparatory work including land acquisition and utility
removal. Right of Way (ROW) to be made available to concessionaires free from all
encumbrances.
NHAI / GOI to provide capital grant up to 40% of project cost to enhance viability on
a case to case basis.
100% tax exemption for 5 years and 30% relief for next 5 years, which may be
availed of in 20 years.
Concession period allowed up to 30 years.
Arbitration and conciliation act 1996 based on UNICITRAL provisions
In BOT projects entrepreneur are allowed to collect and retain
tolls
Duty free import of specified modern high capacity equipment for highway
construction.