Centre's 33 TN Infra Projects Face 25% Cost Overrun

21 Dec 2024 CW Team

The Union Ministry for Statistics and Programme Implementation has reported that central agencies managing 33 infrastructure projects in Tamil Nadu are dealing with a cumulative cost overrun of 25.41 per cent. These projects, originally estimated at Rs 792.26 billion, are now projected to cost Rs 993.53 billion, with various factors contributing to delays and increased expenses.

According to data from the online project monitoring system, significant cost overruns have been observed in projects such as the Tuticorin airport development and the Trichy airport upgrade. The Bharat Petroleum Corporation (BPCL) Irugur-Devangonthi project, sanctioned in 2012, has seen a cost escalation of 155 per cent, with its budget now revised to Rs 17.32 billion despite being only 44 per cent complete. Similarly, the Mass Rapid Transit System (MRTS) extension from Velachery to St. Thomas Mount, which began in 2006, has experienced a 48 per cent cost overrun, bringing the revised estimate to Rs 7.34 billion.

On a national scale, as of November, 438 out of 1,747 on-going projects have exceeded their original cost estimates, resulting in a combined cost overrun of 62 per cent. The ministry explained that the reasons for these delays and increased expenses vary across projects and include technical, financial, and administrative challenges. It identified factors such as underestimation of initial costs, fluctuations in foreign exchange rates, changes in statutory duties, rising costs of environmental safeguards and rehabilitation measures, increasing land acquisition expenses, labour shortages, scope changes, monopolistic pricing by vendors, general inflation, and time overruns.

One notable example is the Tindivanam-Nagari new railway line project undertaken by Southern Railways, which illustrates the scale of these challenges.

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