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1361 infrastructure projects face 20% cost escalation on delays

The original cost of executing these projects was assessed at Rs 16.78 trillion

Jayajit Dash  |  Bhubaneswar 

The construction cost for developers has gone down with projects being completed within the timeframe, a source said

As many as 1361 infrastructure projects being implemented across the country are faced with cost escalation of 20.16 per cent due to delay in commissioning.

The original cost of executing these projects was assessed at Rs 16.78 trillion. After evaluation, the cost of the projects stands revised at Rs 20.16 trillion, a report by CARE Ratings noted, sourcing data published by the infrastructure and project monitoring division of the Ministry of statistics & programme implementation.

Already, Rs 7.68 trillion or 38.1 per cent of the cost of the anticipated project has been incurred. Cost escalation is attributed to cost under-estimation, escalation in environmental safeguarding, land acquisition and rehabilitation expenses, change in scope of projects and other factors like inflation, monopolistic pricing by vendors and time overrun.

The number of projects under implementation has risen sharply from 727 in April 2014 to 1361 in August 2018, marking an average growth of around 20 per cent in four years. Between April and July 2018, 34 major projects with outlay exceeding Rs 150 million each, have been commissioned. Steel, power & transmission, atomic energy, petroleum & petrochemicals and urban development were the key sectors where projects got completed.

While 386 out of 1361 projects are running on schedule, 296 others have been delayed. Of the residual projects, 358 are burdened with cost overrun and 66 are confronting both cost and time overruns.

The report compiled by CARE Ratings establishes that delayed projects or projects without definitive timeline for completion make up to 71 per cent of the projects under implementation. There are 679 unmonitored projects that are yet to report timelines or the status of completion. Almost two-thirds of the costs needed to complete the projects is unspent, mirroring the huge funding requirement from the government to commission them.

Projects valued at Rs 4.53 trillion or 22.5 per cent of the anticipated cost, have more than one state as beneficiary as their implementation spans geographical borders. Such projects have been classified as multi-state projects. Maharashtra tops the list of this category of projects, accounting for 9.2 per cent share in value terms. The state has 129 projects being implemented with the initial cost pegged at Rs 1.72 trillion. Other states that follow are Uttar Pradesh (six per cent), Tamil Nadu (6.5 per cent), Andhra Pradesh (5.1 per cent) and Odisha (4.3 per cent). Karnataka, Bihar, Madhya Pradesh, West Bengal and Chhattisgarh too, have significant projects under execution.

The projects are being implemented across 16 sectors. Railways, roads, power, petroleum and coal account for a staggering 84 per cent share of the projects by value. These five key sectors form the thrust area of the Union government. But sectors like coal are impeded by lack of evacuation infrastructure and capacity. Other such as Railways and power transmission are dogged by network congestion and inadequate investments over a prolonged period of time.

First Published: Sat, November 24 2018. 17:11 IST
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