Rs 1 Tn National Highway Projects Delayed: Care Ratings

11 Feb 2025 CW Team

Over half of the 374 road projects awarded by the national highways authority, with a total construction cost of Rs 1 trillion, have experienced delays exceeding six months as of December 2024. The extent of time overruns has risen significantly, from 33 per cent in June 2023 to 55 per cent by the end of 2024, indicating worsening project execution timelines.

All these projects are being implemented under the Hybrid Annuity Model (HAM), which remains the dominant approach in national highway development, accounting for 55 per cent of all projects. These contracts, awarded between 2015 and 2024, cover approximately 16,000 km and have a total bid project cost (BPC) exceeding ?4.03 trillion.

By September 2024, around 42 per cent of the projects, with a combined BPC of over Rs 1.65 trillion, had been completed. Approximately 45 per cent of the projects, valued at Rs 1.80 trillion, were still under construction, while the remaining 13 per cent were awaiting the appointed date to begin work.

Among the projects currently under construction, delays affect 55 per cent of them, amounting to an aggregate BPC of Rs 1 trillion. While extensions of time are granted to mitigate project-specific risks, such delays ultimately slow down the overall pace of highway construction and impact the profitability of developers.

The primary causes of these delays include increasing competitive pressure in the sector, difficulties in securing obstruction-free rights of way, and adverse weather conditions such as excessive rainfall. These challenges continue to affect project execution, leading to extended timelines and potential cost escalations.

News source: The New Indian Express

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