Second Covid-19 wave had minimal impact on highway projects: NHAI official

Many road contracts have in-built provisions to help them tide over input price hike; NHAI monitoring situation on the ground

The second wave of Covid-19 has had negligible impact on highway projects, said a National Highways Authority of India (NHAI) official, adding that the Authority is monitoring the situation on the ground.
 
Investment in infrastructure is essential to pull the economy out of the Covid-induced trough, say economists.
 
According to an official, “As the country battles the second wave of Covid19, we are constantly taking stock of the situation and are assessing the impact it will have on different projects across states. As of now, there is negligible or minimal impact.”
 

All NHAI site officers along with the stakeholders (contractors/concessionaires) have been asked to strictly follow Covid protocol and get the maximum number of workforces vaccinated as early as possible.

 
The official said efforts are on to reduce the impact of Covid in the days to come.
 
In terms of impact due to increase in the price of raw material used for developing highway infrastructure, certain contracts have in-built provisions.
 
In engineering, procurement, and construction (EPC), and hybrid annuity model (HAM) projects, there is a provision in the contract agreement to make the payments linked to the wholesale price index (WPI). So, if the price of raw material increases, the cost of road projects also increases, he added.
 
The second wave halted road construction around the country as some projects grappled with migrant exodus and others were impacted due to the health of the labour force. The projects stare at cost escalation if the wave continues for a longer time.

 
Besides road construction, real estate construction has also taken a hit, but with the government making an exception for construction activity this time has resulted in minimal loss.
 
In the case of civil construction work, the ban has been lifted in some states but the activity is yet to take off due to migration of workforce from urban areas to the hinterland.
 
As far as raw material price is concerned, some experts believe that the majority of the roads are constructed on bitumen and therefore they won’t have a huge impact. However, bridges that are built with cement and steel will feel the heat due to the price hike.

 
The Ministry of Road Transport and Highways, in its toll policy, charges 10x toll rate for major bridges and structures. According to estimates, the current per km cost of road construction for Bharatmala is about Rs 15-20 crore per km.
 
This suggests an average cost of about Rs 150-200 crore per km.
 
However, some experts believe that the structure costs vary widely depending on design choices (eg. cable bridges and terrain Himalayan bridges are expensive).
 
According to media reports, the price of steel has gone up to Rs 65,600 per tonne, from Rs 35,000 last year, while the cement price has increased to Rs 420 a bag from Rs 280.