After a slew of reforms, the roads and highways sector is gradually stepping it up again. Up until a year ago, progress in road construction had become exceedingly sluggish.
The government plans to award Rs 28,000 crore worth of highways development projects in the current fiscal under the newly conceived hybrid annuity model amid renewed interest among private firms.
The Hybrid Annuity Model (HAM) garnered a favourable response from both the EPC and the BOT players with intense competition till January 2017. HAM has become the most preferred mode of awarding projects by the NHAI now – around 53 per cent of the awards in FY2017 were made through the HAM route when compared to 8 per cent in FY2016. This is likely to increase further in FY2018.
According to rating firm ICRA outlook for the road sector, while the engineering, procurement and construction (EPC) project executions may witness a temporary slowdown during the general elections; the build-operate-transfer (BOT) and hybrid annuity model (HAM) projects executions are expected to continue unabated.
ICRA has given a stable outlook for the construction sector, in its year end assessment of the sector. The order inflow for construction sector has been robust over the last few years, supported largely by increased government spending towards infrastructure.
800 km of highway execution estimated to be at risk this fiscal
NHAI has appointed MEP Infrastructure Developers for the work under HAM
