Highway projects worth Rs12,000 crore delayed

The National Highways Authority of India (NHAI) has been extending bid due dates for 12 highway projects worth Rs12,000 crore since the beginning of this year.

Most of the projects have seen extension of financial bidding on more than one occasion, the maximum being six times.

NHAI says lack of proper bids and difficult project terrains are responsible for the scenario. But the industry has put the blame on improper co-ordination between the Planning Commission and NHAI.

Projects, pending for over six months now, are likely to see cost escalation.
A top NHAI official said, “Very detailed planning has to be done for projects being undertaken in difficult terrains. Difficulties in the projects are not factored in the standard bidding procedures. That is precisely the reason for some of the projects being held up.”

He, however, ducked queries on whether the request for qualification issued for these projects accounted for the high investment cost in such projects.

The projects that are held up since January this year include Raipur Bilaspur worth Rs1,500 crore, and Vijaywada-Machilipatnam worth around Rs600 crore, among others. With almost a year gone, the projects are likely to see cost escalation.

NHAI, however, does not plan to jack the investment amount in these projects as of now. Another NHAI official said, “We do not plan to hike cost of the projects from our side. The scenario has emerged due to lack of proper bids also. Highway construction has seen a major turnaround since 2008-09. Of late, we have seen competitive bids, with more than 12-15 contenders for one project. In this scenario, we are looking for the best possible option and would rather wait.”

Industry sources, however, feel that cost will have to be revised, so that the developer is able to recover his investments from the projects.

They also blame co-ordination gap between the NHAI and Planning Commission for the scenario.

“NHAI issued a circular earlier this year that a company will be allowed to bid only if it has achieved financial closure in three preceding projects. The Planning Commission is now not approving the same, resulting in projects being stuck,” said an industry source on condition of anonymity.

NHAI officials have denied that.