There has been a 60 per cent drop in the pace of highways constructions across the country. From a record 37 km road construction a day for 2020-21, the pace of national highways construction slipped to merely 19.44 km a day in the current fiscal.

The pace of construction had slowed down to an average of 28.64 km per day due to Covid-19 related issues in 2021-2022. Now the construction has to grow at a rapid pace of 55 km a day in the remaining period to achieve the target of building 40 km per day set by the Government for the current fiscal. “The Ministry has constructed 3,559 kilometres of National Highways up to September in 2022-23 as compared to 3,824 kilometres constructed up to September in 2021-22,” the Ministry of Road Transport and Highways (MoRTH) said in its monthly summary for the Cabinet for September 2022.

According to the Ministry data, the contract award figure is 4,092 kilometres during April-September this year, as compared to 4,609 kilometres in the corresponding period a year ago. Reacting to the slow down, Road Transport Minister Nitin Gadkari said problems relating to land acquisition and environmental clearances, apart from Covid-related disruptions, were coming in way of faster execution of projects.

Gadkari, who has been regularly credited to give a massive fillip to the highways and expressways constructions in the country, assured that the Ministry and NHAI are trying to meet the target.

“Let’s wait until the end of financial year. The last financial year slow down was hit by pandemic-related disruptions and a longer-than-usual monsoon in some parts of the country,” he said.

In a related development, the rating agency CRISIL on Thursday said e-NHAI awarded only 777 kilometres of road projects in the first half (April-September) of the current fiscal, which is a three-year low.  This is also a 60 per cent drop over the corresponding period last year. CRISIL l had in July estimated that the pace of construction might go up to 32-34 km per day this fiscal, as input prices were expected to remain elevated.

The NHAI and National Highways and Infrastructure Development Corporation Ltd (NHIDCL) are primarily responsible for the construction of national highways and expressways across the country. The official target of highway construction has been kept at 12,000 kilometres for the current financial year. The ministry had constructed 10,237 kilometres in 2019-20, 13,327 kilometres in 2020-21 and 10,457 kilometres in 2021-22.

The central road making agency has floated tenders worth about 2,200 km so far this fiscal, which is 36 per cent higher than the corresponding first half of the last fiscal. “Slackened pace of execution and highly inflated prices of key input materials owing to uncertainties arising out of global geopolitical tensions, have acted as major impediments to contract awarding momentum,” Crisil said in a latest sectoral note.

Considering the ramp-up that typically happens in the fourth quarter, awarding in the second half of the fiscal is expected to improve substantially. Nonetheless, awarding for the full fiscal is still likely to be moderate. “We expect 4,800-5,200 km of awards this fiscal, much lower than the 6,306 km awarded last fiscal,” the rating agency noted.

Of the 777 kilometres awarded in the first half of this fiscal, hybrid annuity model (HAM) projects cornered a healthy 51 per cent share, while engineering, procurement and construction (EPC) accounted for the rest. The shares are expected to remain at current levels for the full fiscal as well, with HAM accounting for 45-50 per cent, EPC for 45-50 per cent and build-operate-toll (BOT) for less than 5 per cent.

The HAM is a hybrid model created by combining elements of the EPC and BOT. “Sharp rise in commodity prices and complex project awards in difficult terrains warranted developers to seek a higher premium to maintain their margins,” the report pointed out.

Gadkari on Thursday said National Highways Infra Trust (NHAI InvIT) is looking to raise an additional Rs 3,800 crore funds of which around Rs 1,500 crores are being garnered through an issue of non-convertible debentures (NCDs) with a long-dated maturity of 25 years. These InvIT bonds will be listed on the BSE and the NSE, providing an opportunity for investors to trade and invest, he added.

NHAI InvIT is the infrastructure investment trust sponsored by the National Highway Authority of India (NHAI) to support the Government’s National Monetisation Pipeline (NMP). Noting that InvIT presents the win-win opportunity for investors and the NHAI, Gadkari said the coupon is 7.9 per cent payable half yearly, which works out to 8.05 per cent interest for the year.

The Minister stated that India is one of the fastest-growing economies in the world and the development of highways in the country will play a crucial role in its growth. He said the Government is working to connect the North Eastern part of the country to the highway network.

“We are working to provide all-weather connectivity to religious and tourist places,” he added. According to the minister, the network of expressways under the Bharatmala Pariyojana has been constructed across the country. “We are working to reduce our logistics cost to single digits from 13-14 per cent of GDP presently,” he said at an event of NHAI InvIT.