Nearly 60 per cent of the projects awarded by the National Highways Authority of India (NHAI) in the first six months of the current financial year (2020-21, or FY21) are government-funded ones.
According to the NHAI, 40 projects — spanning 1,330 km and worth Rs 47,289 crore — were awarded in the April-September period, despite challenges triggered by the Covid-19 pandemic.
“The projects awarded so far in the first half of the current financial year are 1.6 times higher of the 828 km awarded in FY19-20 and 3.5 times higher of the 373 km awarded in FY18-19 during the same period,” said the NHAI in a statement.
The projects include cost of civil work, land acquisition, and other pre-construction activity. Of the 40 projects, 24 highway contracts are engineering, procurement, and construction (EPC) projects; the rest 16 are hybrid-annuity model (HAM) contracts, an official said.
EPC contracts are executed with the exchequer’s money and give contractors straight-up liquidity without any traffic risk. In the case of HAM projects, the government provides funds to the tune of 40 per cent of the total cost.
“It is relatively easier to bid out an EPC contract than a HAM project because the latter takes longer to finalise,” said Kushal Singh, partner, Deloitte India.
The authority said it plans to award 4,500 km of projects in FY21.
According to the data available on the NHAI website, Dilip Buildcon, Larsen & Toubro (L&T), IRB Infrastructure Developers (IRB Infra), Sadbhav Engineering, Ashoka Buildcon, PNC Infratech and G R Infraprojects are some of the companies issued letter of awards in FY21.
Dilip Buildcon, one of the main beneficiaries, said in its August 14 analyst presentation that the company had recorded overall orders worth Rs 10,703 crore to date in FY21. Of this, Rs 5200 crore was from the NHAI at different stages of award and included three HAM projects.
Ashoka Buildcon also announced order wins worth Rs 1,390 crore. These are two EPC projects from the NHAI.
The highways authority awarded EPC packages related to the Delhi-Vadodara Expressway to L&T in June, according to company disclosures.
The NHAI awards also include two EPC projects awarded to Sadbhav Engineering for Rs 1,572.3 crore (combined), and a HAM project worth more than Rs 1,700 crore given to IRB Infra.
Recently, the NHAI agreed to implement the suggestions made by different industry bodies towards improving the national highways.
In March, the NHAI disbursed Rs 10,000 crore through online payments. In the first quarter of FY21, the NHAI disbursed more than Rs 15,000 crore to vendors. It said that additionally, steps such as monthly payment to the contractors were taken to ensure cash flow to them.
Such moderations will result in a spiralling effect — not only on the growth of the road sector, but will also play a critical role in nation building and advancing the growth of the Indian economy — the NHAI said in a statement.