According to CRISIL, of the total length awarded by the NHAI in financial year 2018, around 51 per cent was through engineering, procurement and construction (EPC) mode. Apart from this, around 46 per cent through the hybrid annuity model (HAM) and the remaining through build-operate-transfer (BOT)-toll mode.

National Highways Authority of India According to data from the National Highways Authority of India (NHAI), awarding of highway construction projects rocketed 70 per cent to an all-time annual high in fiscal year 2018, spanning around 7,400 km, worth Rs 1.2 lakh crore.

Pace of highway projects execution to pick up! If the NHAI manages to source funds on time, and over and above the budgetary allocation, CRISIL Research expects both the award and execution of highway projects to be even faster in fiscal years 2019 and 2020, as compared to FY18. According to data from the National Highways Authority of India (NHAI), awarding of highway construction projects rocketed 70 per cent to an all-time annual high in fiscal year 2018, spanning around 7,400 km, worth Rs 1.2 lakh crore. This is in comparision with around 4,300 km projects, worth Rs 59,000 crore that was awarded in fiscal year 2017.

According to CRISIL, of the total length awarded by the NHAI in financial year 2018, around 51 per cent was through engineering, procurement and construction (EPC) mode. Apart from this, around 46 per cent through the hybrid annuity model (HAM) and the remaining through build-operate-transfer (BOT)-toll mode. According to CRISIL, in financial year 2017, 34 per cent was through EPC mode, 56 per cent was through HAM and the rest of 10 per cent was through BOT-toll. CRISIl also claimed the fact that competition remains high in the EPC mode and under HAM, it remains low to moderate.

Prasad Koparkar, Senior Director, CRISIL Research says, “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.” According to CRISIL, the contract awarding momentum was muted in the first three quarters of financial year 2018 at around 1,700 km, which was majorly comprised of EPC mode projects. Most of the HAM projects were bid out in January-March, CRISIL claimed. It is expected that the momentum seen in the fourth quarter will continue in the first quarter of fiscal 2019 with many projects already being tendered and waiting to be awarded.

In addition to this, CRISIL also said that fewer contractors won most of the HAM projects, which could stretch their management capacity and lead to the overall share of such projects, which were being awarded declining in fiscal 2019. As per the press release by CRISIL, the execution in financial year 2018 up to the month of January was 1,993 km, compared with 2,625 km for the whole of fiscal 2017.

Binaifer Jehani, Director, CRISIL Research says that more bundles of existing toll roads are likely to be put on the block under the toll-operate-transfer (TOT) model by NHAI to generate capital this year. This follows the success of the first 9 bundles auctioned in February-end, which generated Rs around 9,700 crore.

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