The ministry of road transport and highways (MoRTH) has approached the Cabinet Committee of Economic Affairs (CCEA), seeking approval for revised cost estimate for the Bharatmala Project. The cost of the flagship project has ballooned to Rs 10.6 trillion from Rs 5.35 trillion, when it was approved in October, 2017
The cost escalation has been due to higher cost of land acquisition and inflated cost of inputs. The delay in approvals is leading to awarding of new projects falling much behind the targets this year.
The land cost (compensation paid to owners) accounts for close to 35% of the total cost of construction of highways. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act of 2015 has increased the cost of acquisition substantially.
As the CCEA approval is awaited for revised costs, the Department of Expenditure in an order on Thursday that no new works are approved and no contracts are awarded under Bharatmala under any phase until approval is received.
Expenditure has been capped at 20% above the cost estimates first approved by the cabinet. Apart from awarding, fresh liabilities cannot be created for land acquisition and pre-construction activities under the project as per the order.
The order of the expenditure department has the agencies involved in highway construction looking for clarity on what to do with the tenders for fresh awards that are already in the different stages of bidding, an official said.
Already the total length of highways awarded during the April-October period has gone down to 2595 km from a little over 5000 km in the same period last year. For the full year the target for awarding new highway projects has been kept at 12,500 km.
Earlier, MoRTH had flagged its concern over the slowing speed of award in a communication to the cabinet. It had said if the target for Award has to be met for this year, decision on the proposal for approval of the revised Bharatmala Phase-l or alternate programme needs to be taken expeditiously. It had also warned that shortfall in award this year will reflect in the progress of construction in 2024-25.
Highway constriction is one of the key priorities for the government as it pushes public spending to support growth. For this year it has provided Rs 2.58 trillion for capital expenditure to MoRTH, up 25% from last year’s revised estimates.
Bharatmala Pariyojana was first approved by CCEA in 2017. It envisaged development of 34,800 km of national highways corridors. Till date work for 26,348 km of stretches have been awarded that would cost Rs 8.24 trillion. Of the total target, 14,300 km of highways under the project have been constructed.
The MoRTH had planned to award the entire remaining 8452 km length of the project this financial year. The award was to mostly include economic corridors and projects under the National Highway Development Programme that were subsumed in Bharatmala.
Now fresh cabinet approval would decide the fate of the remaining Bharatmala.