National Highways Construction In India To Slow Down To 31 km/Day In FY25: CareEdge Ratings
National Highways construction in India is expected to slow down to around 31 km/day in FY25 due to heightened execution challenges, as per CareEdge Ratings.
The pace of National Highways construction in India is estimated to slow down by 7-10% to around 31 km/day in the current fiscal due to heightened execution challenges, CareEdge Ratings said on Tuesday.
The pace of National Highways construction in India during FY24 registered a healthy uptick of 20% to 34 km/day.
"CareEdge Ratings expects National Highways Construction to slow down from 12,350 km in FY24 to 11,100-11,500 km in FY25," it said.
However, according to the rating agency, despite the uptick, the pace of construction fared lower than 37 km per day reported in FY21 due to execution woes and an increasingly competitive landscape.
It said BOT (build, operate and transfer)-HAM remained the preferred mode of award, constituting around 55% of the total projects awarded during FY21-24.
Under the HAM model, the government provides 40% of the project cost to the developer to start work, while the remaining investment are made by the contractor.
CareEdge Ratings said 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 value of Rs 50,000 crore are facing delays, ranging from 4-6 months beyond the grace period of three months.
These projects have applied or received an extension of time of a similar or longer period, it added.
According to the rating agency, of the total awards of 12,300 km by the National Highways Authority of India in FY22 and FY23, 20% continue to await the appointed date for more than one year.
