High steel, cement prices to stop highway work

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New Delhi, May 6: Construction of prestigious National Highway Development Project (NHDP) could come to a halt in three months if adequate steps were not taken by the Government to address problems caused by steep rise in prices of inputs like steel and cement, the highway builders warned.

"In three months, if nothing is done NHBF will have to stop construction work", said coordinator of the National Highway Builders Federation (NHBF) V C Verma after a meeting of the federation members with Prime Minister Manmohan Singh on Tuesday.

NHBF sought Singh's intervention on issues concerning price rise and demanded that a committee be constituted to look into their case for increasing toll rate or the contract period for projects offered on Build Operate and Transfer (BOT) basis.

The builders told the Prime Minister that prices of steel, cement and bitumen have seen an increase of more than 100 per cent making it virtually impossible for them to proceed on BOT projects without any price escalation reimbursement.

The Federation told the Prime Minister that national highway projects "cannot proceed since builders cannot afford the construction when they are unable to bear heavy losses on account of price escalation."

They also pointed out escalation clauses provided in many contracts in highway constructions are not sufficient to accommodate the extra-ordinary variation and, therefore, these cost increases should be borne by the developers.

The builders also pointed out that the cost escalation based on the movement in the Wholesale Price Index (WPI) was not adequately covering the real increase in prices of inputs like steel, cement and bitumen.

The builders said the price increase in WPI is not in tandem with the market price increase of construction materials and demanded that the index be corrected to match the real increase in prices of essential inputs.

The builders said the government should reimburse the additional cost based on re-worked indices for steel, cement and bitumen.

The prestigious NHDP, which envisages construction and upgradation of 50,000 km national highways in seven phases, is slated for completion by 2015 at an estimated cost of Rs 2.48 lakh crore.