India’s ambitious drive to expand its national highway network is expected to face a slowdown in the current fiscal year, according to a report released by CareEdge Ratings on Tuesday. The rating agency anticipates a decrease of 7-10 per cent in the construction pace, estimating it to be around 31 km per day due to escalated execution challenges.
This projection comes after a notable surge in construction during the previous fiscal year, FY24, where the pace reached a commendable 34 km per day, marking a substantial 20 per cent increase. However, despite this uptick, the current pace lags behind the levels achieved in FY21, attributed to persistent execution hurdles and a progressively competitive environment, the report stated.
BOT-HAM (Build, Operate, and Transfer – Hybrid Annuity Model) remains the favored mode of project awards, constituting approximately 55 per cent of total projects awarded during FY21-24. Under the HAM model, the government provides 40 per cent of the project cost to kickstart the work, with the remainder funded by the contractor.
CareEdge Ratings highlighted that around one-third of the HAM projects awarded post-March 2020, amounting to approximately Rs.1.50 lakh crore, are encountering delays ranging from 4-6 months beyond the three-month grace period. These projects have either applied for or received extensions of time (EOT) of a similar or longer duration.
Moreover, out of the total awards of 12,300 km by the National Highways Authority of India (NHAI) in FY22 and FY23, 20 per cent are still awaiting the appointed date for more than a year, as per the rating agency’s analysis.
(With inputs from PTI)