NH execution to be slower by 10 pc in FY25

Chennai: The pace of execution of national highways is expected to slow down by 7-10 per cent during FY25 to around 31 Km/day.The pace of construction for National Highways in India during FY24 registered a healthy uptick of 20 per cent to 34 Km/day against 28 Km/day in FY23 though it was lower than 37 km per day reported in FY21.

However, this may slow down National Highways Construction to slow down from 12,350 Km in FY24 to 11,100-11,500 Km in FY25, finds Care Ratings. Execution woes and an increasingly competitive landscape added with project complexities, rising participation of moderate creditworthy sponsors, and significant delay in the receipt of appointed date post award of the project are expected to pull down the execution pace by 7-10 per cent during FY25 to around 31 Km/day.

Further, FY24 witnessed a downturn, with project awards declining by 31 per cent compared to the previous fiscal year and way below the Ministry's target of 13,290 km for FY24. The decline in awards was primarily due to the pending approval of revised costs from the cabinet towards projects under Bharatmala Pariyojana. A decrease of 10-15 per cent in awards was already anticipated due to legislative elections and the subsequent imposition of the code of conduct.

Moreover, NH- Hybrid Annuity Model (HAM) projects with an aggregate length of over 2,200 km are yet to commence construction for over one year after the award. Of the overall sample of HAM projects awarded after March 2020 amounting to Rs.1.50 lakh crore, approximately one-third of the projects with an aggregate Bid Project Cost (BPC) value of Rs. 50,000 crore are facing delays ranging from 4-6 months beyond the grace period of three months. Altogether, the project completion cycle has stretched from earlier 2.75-3.25 years to around 3.5-4 years.