NHAI to issue green bonds worth Rs 1,000 crore

New Delhi: The National Highways Authority of India (NHAI) will issue green bonds worth Rs 1,000 crore to raise funds for the implementation of environment-friendly measures such as solar lighting, rainwater harvesting, and wildlife underpasses on the Delhi-Mumbai Expressway project, according to an official statement issued on Thursday.

The bonds are to be issued by NHAI’s fully owned Special Purpose Vehicle (SPV) ‘DME Development Ltd’ (DMEDL) under the closed bidding system. The aggregate total size of the issue will be up to Rs 1,000 crore with a base issue size of Rs 500 crore. There will be a green-shoe option to retain oversubscription up to Rs 500 crore, as per the statement.

The first-of-its-kind green bond issue in the Roads and Highways sector is expected to be launched in the second week of December 2024 and will be completed with strict compliance to the government's sovereign green bonds framework, international protocols and SEBI guidelines, it said.

The proceeds from the issue of ‘Green Bonds’ will be used for activities such as expenditure on avenue plantation, median plantation, construction of animal underpasses, natural stormwater drainage, streetlights on renewable energy (solar), waste recycling & reuse, and rainwater harvesting.

NHAI Chairman Santosh Kumar Yadav said: "This initiative is a part of our vision to create greener National Highways and reiterates NHAI’s commitment towards environmental sustainability. The green bonds will help to encourage investment in eco-friendly projects, especially in the Roads & Highways sector and will facilitate long-term cost savings by reducing energy consumption and lowering the impact of vehicular emission on the environment."

The issue will help in enhancing DMEDL's financial performance in terms of the overall cost of borrowings and will diversify the investor base by attracting ‘Environmental, Social, and Governance’ focused investors. DMEDL has appointed Care Edge Analytics as the Third-Party Reviewer (TPR) who has identified and certified the green activities of DMEDL.

Incorporated in August 2020, DME Development Ltd is a wholly owned Special Purpose Vehicle (SPV) of the NHAI for financing, construction, and operation of the Delhi-Mumbai Greenfield Expressway and has received AAA rating from CRISIL, CARE and India Rating. DMEDL aims to raise about Rs 48,000 crore from banks & financial market through loans & bonds and has successfully raised around Rs 42,000 crore till now for the implementation of the Delhi-Mumbai Expressway project.