Awarding of highway construction projects rocketed 70% to an all-time annual high in fiscal 2018, spanning ~7,400 km and valued at Rs 1.2 lakh crore, data from the National Highways Authority of India (NHAI) showed. That compares with ~4,300 km projects worth Rs 59,000 crore awarded in fiscal 2017.

 

CRISIL Research expects both the award and execution of projects to be even faster in fiscals 2019 and 2020 if the NHAI manages to source funds on time, and over and above the budgetary allocation. Of the total length awarded by the NHAI in fiscal 2018, ~51% was through the engineering, procurement and construction (EPC) mode, ~46% through the hybrid annuity model (HAM) and the balance through build-operate-transfer (BOT)-toll mode. In fiscal 2017, the proportions were 34% EPC, 56% HAM and 10% BOT-toll. Competition remains high in the EPC mode, and low-to-moderate under HAM.

 

Says Prasad Koparkar, Senior Director, CRISIL Research: “Majority of the EPC projects were bid out at par or well below the NHAI’s request for proposal (RFP) cost – in some cases, even 20-25% lower. On the other hand, under HAM, most of the projects were won above NHAI’s RFP cost, some even 45-50% higher.”