The Ministry of Road Transport and Highways is in talks with the Employee Provident Fund Organisation (EPFO) to raise about Rs 50,000 crore. The amount would be used for the expansion of highway projects.
The road and transport ministry will use the funds for medium-sized highway expansion projects, which would be constructed under the government funded Engineering Procurement and Construction (EPC) fund, The Economic Times reports. The EPFO, which manages a corpus of Rs 8 lakh crore, is reportedly seeking an interest rate higher than 8.75 percent.
"It is a safe proposition for EPFO because in running road projects, there is a safety of regular income and yields," Vinayak Chatterjee, Chairman of infrastructure company Feedback Infra was quoted as saying by the daily.
The ministry has offered EPFO its toll guarantee and is currently in talks with Life Insurance Corporation of India (LIC) for a similar deal. According to reports, the ministry has also approached pension fund firms in Canada, Netherlands and Germany to take up the government-constructed projects. The firms have also been offered to operate under the TOT (Toll-Operate-Transfer) basis.
Under the TOT framework, the highways are constructed by the ministry and then transferred to private sector companies, which in turn operate the highways and collect tolls for many years.
India is reportedly offering 104 road projects under the TOT model.
"We have got a good response from various international pensions funds. They will be coming with their local partners, who will handle the operations and management of the projects," an official told ET.
Last month, it was reported that Abu Dhabi investment authority (ADIA) is keen to take up 50 highway projects on a toll-operate-transfer basis. The firm would invest Rs 35,000 crore in India's infrastructure sector.
[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]