The National Highways Authority of India recently announced that it is going to raise Rs 1,000 crore in the form of green bonds for environment-friendly initiatives on its Delhi-Mumbai Expressway. It has now become the most massive ever issue, considering this will fund some environmental measures down the stretch toward sustainability. It would raise such bonds on the second week of December, 2024 by mobilizing through its wholly-owned Special Purpose Vehicle, namely DME Development Limited, a wholly-owned Subsidiary of NHAI.
Background Information: Green Bond Issue
Green bonds will be issued through a closed bid system. Base issue size has been kept at Rs 500 crore along with an additional green shoe option of another Rs 500 crore, which can be utilized in case the bonds are over-subscribed. It is for the first time that green bond issuance will be done for roads and highways projects in India.
The funds raised from the bond issue would be primarily utilized in taking forward various environmental works on the Delhi-Mumbai Expressway, one of India’s most ambitious infrastructure projects. These funds will be utilized for supporting avenue plantation, median plantation, construction of animal underpasses, and installation of streetlights powered by renewable energy. Furthermore, the funds will also be used for supporting stormwater management, waste recycling, and rainwater harvesting initiatives that form a part of India’s commitment towards sustainable development.
Objectives and Environmental Impact
The NHAI green bond will, in that respect, perfectly fit the broader governmental vision of establishing a greener infrastructure network, with particular focus in the roads and highways sector. NHAI Chairman Santosh Kumar Yadav described this bond issue as a very significant step towards developing environmental sustainability within the country’s infrastructure projects. Not only does the bond support ecologically friendly activities, but also it decreases the long-term cost through less consumption of energy, which would have a lower environment impact through emissions from vehicular activities.
The major environmental concerns this transport corridor along Delhi-Mumbai shall achieve will, according to the NHAI. For the moment, this money being invested on shall be supporting in a major way towards certain significant activities amongst others as enlisted:
- Avenue and Median Plantation: Land to be greened up over avenues and center line.
- Animal Underpasses: Constructions will help reduce kill through wildlife under passage.
- Solar-Powered Streetlights: Providing energy conservatory lighting in Solar-based alternative energy.
- Stormwater Management & Rainwater Harvesting: Installing systems that manage rain water run off with a view to conserve available water resources.
- Waste Recycling & Reuse: Infrastructure of recycling and reuse of wastes in order to minimize the harmful pollution to the ecosystem.
This will also result in ecological enhancement of the zones around the expressway. It is indeed, the trend going to follow in all infrastructures projects taken in India here onwards.
Role and Financial Prospect of DMEDL
DMEDL was constituted in August 2020 as an SPV by NHAI and would be involved in the financing, construction, and operation of the Delhi-Mumbai Greenfield Expressway. In its fund mobilization mission, the company played a seminal role for NHAI towards raising funds and managing the financial aspect of the project. DMEDL has mobilized around Rs 42,000 crore till date out of the projected loans and bonds worth Rs 48,000 crore.
Apart from its fund-raising business, DMEDL has received high credit ratings from major rating agencies such as AAA ratings by CRISIL, CARE, and India Rating. These credit ratings reflect that the company maintains a very strong financial condition and is very well-equipped to honor all the financial commitments that are associated with the Delhi-Mumbai Expressway project. It will issue green bonds with a strong grounding toward being a success case to attract diverses pools of ESG-concerned investors.
The Green Bond Advantage
This will promote the diversification of DMEDL’s investor base. These will appeal to more ESG focused investors who then would be investing long in the green infra sector through this type of financing. Besides these, they may also reduce borrowings costs at DMEDL as well in addition to opening access to relatively better funds on its books – to build it more sustainable yet environmentally friendly expressways.
In addition, Care Edge Analytics is an independent review which provides more credence to the green activities of DMEDL. Independent reviews will ensure that the funds used for green bonds are actually expended on projects which will benefit the environment with the highest standards in sustainability.
Conclusion
The green bond initiative undertaken by NHAI for the Delhi-Mumbai Expressway is another giant leap ahead in the sustainable development of infrastructure across India. The amount collected for this project is Rs 1,000 crore. Much-needed environmental measures will be funded by these, which are beneficial to the expressway and fit well with India’s larger environmental goals. This marks a new precedent in India in raising eco-friendly infrastructure finances because it is the first green bond issuance in the roads and highways sector. It will leave a long-term legacy for the transportation network of the country and its environmental sustainability with continuous support from stakeholders and investors.
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