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Highway project cost overrun by 100%: Bharatmala phase-1 to now cost Rs 10.6 trillion

“The exponential increase in land acquisition cost along with steep rise in commodity prices had resulted in cost escalations,” said Icra’s Rajeshwar Burla.

Highway project cost overrun by 100%: Bharatmala phase-1 to now cost Rs 10.6 trillion
The deadline for completion of the project has been extended to 2026-27 as only 20,632 km or 59.28% has been awarded and just 7,375 km or 21.19% of the target has been constructed till December 2021.

The first phase of the ambitious highway project – Bharatmala pariyojna (BMP) – is likely to see near 100% cost overrun, a parliamentary committee has noted.

With only a fifth of the construction target having been achieved so far, the phase can now be completed by FY27, against the original deadline of FY22. This means the cost of BMP Phase-I could be Rs 10.63 trillion, against the original estimate of Rs 5.35 trillion, the parliamenary committee on highways noted in its report presented to the Rajya Sabha on March 14.

The government, had in October 2017, approved the first phase of the highway construction programme with an aggregate length of 34,800 km (including 10,000 km residual stretches under National Highways Development Project) for an estimated outlay of Rs 5.35 trillion. The entire road length was proposed to be completed by 2021-22.

The deadline for completion of the project has been extended to 2026-27 as only 20,632 km or 59.28% has been awarded and just 7,375 km or 21.19% of the target has been constructed till December 2021.

The committee, headed by TG Venkatesh, also said the revised target would also prove to be a ‘great challenge for the ministry’ to achieve.

“The exponential increase in land acquisition cost along with steep rise in commodity prices had resulted in cost escalations,” said Icra’s Rajeshwar Burla.

The Bharatmala programme is focused on bridging critical infrastructure gaps through effective interventions like development of economic corridors, inter corridors and feeder routes, national corridor efficiency improvement, border roads and international connectivity roads, coastal & port connectivity roads and greenfield expressways. Multi-modal integration is also built into this programme.

Special attention has been paid to fulfilling the connectivity needs of backward and tribal areas, areas of economic activity, places of religious and tourist interest, border areas, coastal areas and trade routes with neighbouring countries.

While there had been a considerable progress on awards and construction of highways in recent years, including a record 37 km per day construction in the last fiscal, analysts said the covid-19 pandemic, problems relating to land acquisition and the sheer size of the programme have pushed the project completion deadline.

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