The government-run National Highways Authority of India (NHAI) said that it has approved an insurance surety bond for the first time in order to proceed with the monetisation plan of the forthcoming Toll Operate Transfer (TOT) Bundle 14 bid.
This will be the first time that the road infrastructure industry uses this cutting-edge tool as a bank guarantee (BG) to monetarily support bids. To carry out this project, NHAI has been collaborating closely with SBI General Insurance, AON India Insurance, and the Highway Operators Association of India (HOAI), according to NHAI.
Without any buffer money, the insurer has provided an insurance surety bond for the NHAI monetisation bid of TOT bundle 14 at a rate of 0.25 percent. According to it, concessionaires will benefit greatly from this, which will increase market liquidity and create an atmosphere that will support the expansion and development of the road industry.
The sector will be held to a new standard when insurance surety bonds are issued, underscoring the significance of creative financial solutions in the dynamic field of road infrastructure development. It will be a big step toward enabling "Ease of Doing Business" and will promote private involvement in the highway industry.
NHAI has received 1,665 BGs totaling Rs. 15,000 crore since 2022. The abundance of BGs is a significant opportunity for insurance companies, and the increased use of surety bonds will increase the amount of cash available for road projects.
