India’s first-of-its-kind green bond issue in the Roads and Highways sector

Reiterating its commitment to promoting environment sustainability and the development of green highways, the National Highways Authority of India’s fully owned Special Purpose Vehicle (SPV) ‘DME Development Limited’ (DMEDL) will issue green bonds to raise funds for the implementation of environment-friendly measures on Delhi-Mumbai Expressway project.

National Highways Authority of India (NHAI) comes under India’s Ministry of Road Transport & Highways. 

To be held under a closed bidding system, the aggregate total size of the issue will be up to Rs. 1,000 Crores with a base issue size of Rs. 500 Crores. There will be a green-shoe option to retain oversubscription up to Rs. 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 December 2024 and will be completed with strict compliance with the Government of India’s sovereign green bonds framework, international protocols and SEBI guidelines.

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 and reuse and rainwater harvesting.

Commenting on this initiative NHAI Chairman, Shri 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 and 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 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 and the financial markets through loans and bonds and has successfully raised around Rs. 42,000 Crore till now for the implementation of the Delhi–Mumbai Expressway project.

India is one of the very few countries that have issued sovereign green bonds. It was announced in the Budget 2022 to employ green bonds in public sector projects which help reduce the carbon intensity of the economy. 

Want to know what is Green Bonds? Read here.