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The National Highways Authority of India (NHAI) is set to issue its inaugural green bonds to raise INR 1,000 crore for the Delhi-Mumbai Expressway project. Scheduled for release in December, the offering will be conducted through a closed bidding process, with a base size of INR 500 crore and a green-shoe option. The funds will support environmentally sustainable initiatives, including animal overpasses, tree planting, solar-powered streetlights, and stormwater management. NHAI aims to attract eco-conscious investors, promoting long-term cost savings and advancing sustainability goals within the roads and highways sector.
The National Highways Authority of India (NHAI) plans to raise INR 1,000 crore through its first-ever green bond issuance to finance the Delhi-Mumbai Expressway. This issuance is expected to be launched in the second week of December. Advertisement
The bonds will be issued through a closed bidding process, with the total offering capped at INR 1,000 crore, including a base size of INR 500 crore. A green-shoe option will be available, allowing for oversubscription up to INR 500 crore.
The funds raised will be used to support various eco-friendly initiatives along the Delhi-Mumbai Expressway. This includes the construction of animal underpasses and overpasses in forested areas, planting tree cover along the highway, installing solar-powered streetlights, creating natural stormwater drainage systems, recycling construction waste and fly ash, implementing rainwater harvesting, and digging ponds.
This effort is part of NHAI's broader vision to develop more sustainable national highways, emphasizing its commitment to environmental stewardship. The green bonds aim to attract investment in environmentally conscious projects, particularly in the roads and highways sector, while also contributing to long-term cost savings through reduced energy use and lower vehicular emissions.
The issuance is expected to strengthen DMEDL's financial position by reducing borrowing costs and broadening its investor base. It will also appeal to investors focused on environmental, social, and governance (ESG) principles.
Founded in August 2020, DME Development intends to raise INR 48,000 crore through loans and bonds from financial markets to support the construction and operation of the Delhi-Mumbai Expressway. To date, it has secured INR 42,000 crore for the 1,380 km project, which is expected to surpass INR 1 trillion in total costs.
The project is divided into 52 segments, with 31 under the engineering, procurement, and construction (EPC) model and 21 following the hybrid annuity model (HAM). The HAM model combines elements of the EPC and BOT models, where the government funds 40% of the project in phases tied to specific milestones, while the contractors are responsible for raising the remaining 60% of the funds. As global efforts to reduce carbon emissions intensify, the demand for green bonds continues to rise.
In conclusion, the green bond issuance by NHAI represents a significant step toward financing the Delhi-Mumbai Expressway while prioritizing environmental sustainability. By targeting eco-friendly projects such as wildlife corridors and renewable energy solutions, the bonds align with global trends in reducing carbon emissions. Additionally, the move is expected to strengthen DMEDL's financial standing by lowering borrowing costs and expanding its investor base, especially among those focused on environmental, social, and governance (ESG) criteria. This initiative underscores NHAI's commitment to creating greener, more sustainable national highways while driving long-term economic and environmental benefits.
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