road

The Indian Ministry of Road Transport and Highways is holding talks with retirement fund body Employees Provident Fund Organisation (EPFO), in order to raise Rs500bn ($7.4bn) in a bid to expand highway projects.

The fund will be used for the development of medium-sized highways that will be built under an engineering, procurement and construction (EPC) basis.

According to the Economic Times, a senior government official said that the EPFO is looking for an interest rate of a slightly more than 8.75% that it offers to its 50 million subscribers at present.

The EPFO manages a corpus of Rs8,000bn ($118.7bn).

"It’s a safe proposition for EPFO because in running road projects there is a safety of regular income and yields."

Infrastructure services company Feedback Infra chairman Vinayak Chatterjee was quoted by The Economic Times as saying: "It’s a safe proposition for EPFO because in running road projects there is a safety of regular income and yields."

The road ministry has offered its toll guarantee to the EPFO.

The ministry is also holding final talks on a similar deal with the state-run Life Insurance Corporation (LIC) of India.

Even though the terms of the transaction have not been finalised, both EPFO and LIC have agreed to fund the ministry because of its high-traction projects, including an increase of 10% every year in the toll revenues.

The ministry has also proposed Canadian, German and Dutch pension funds to invest in the Indian highway sector by funding government-constructed projects under the toll, operate and transfer (TOT) basis.

Image: The Indian Road Ministry plans to raise $7.4bn to expand highway projects. Photo: courtesy of seaskylab via Wikipedia.