NHAI to issue green bonds worth ₹1,000 crores

The National Highways Authority of India’s (NHAI) fully-owned special purpose vehicle (SPV) — DME Development Limited (DMEDL), which is constructing and maintaining the Delhi-Mumbai expressway, will issue green bonds to raise funds for implementing environment friendly measures on the expressway.

The total size of the issue will be up to ₹1,000 crore with a base issue size of ₹500 crores. There will be a green-shoe option to retain oversubscription of up to ₹500 crores. The first-of-its-kind green bond issue in the roads and highways sector is expected to be launched in the second week of this month, according to NHAI.

The proceeds will be used for expenditures on avenue plantation, median plantation, construction of animal underpasses, natural storm water drainage, streetlight on renewable energy (solar), waste recycling and reuse, and rainwater harvesting.

“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 and highways sector, and will facilitate long-term cost savings by reducing energy consumption and lowering the impact of vehicular emission on the environment,” said Santosh Kumar Yadav, chairman, NHAI.

The issue will help enhance DMEDL's financial performance in terms of the overall cost of borrowings and diversify its investor base by attracting Environmental, Social, and Governance (ESG)-focused investors. “DMEDL has appointed Care Edge analytics as the Third-Party Reviewer (TPR), who have identified and certified the green activities of DMEDL,” said NHAI in a release.

"Incorporated in August 2020, DME Development Ltd. is a wholly owned SPV for financing, construction, and operation of the Delhi-Mumbai Greenfield Expressway and has received AAA rating from CRISIL, CARE and India Ratings,” the release said.

“DMEDL aims to raise about ₹48,000 crore from banks and financial markets through loans & bonds and has successfully raised around ₹42,000 crore till now for the implementation of the Delhi–Mumbai Expressway project."