Bharatmala Pariyojana project cost soars to Rs 10.64 lakh crore, more than doubles : ICRA

NEW DELHI : The Bharatmala Pariyojana (BMP) programme’s project cost has surged to Rs 10.64 lakh crore, more than doubling due to a sharp increase in input costs and rising land acquisition expenses, according to the rating agency ICRA. The Bharatmala Pariyojana, India’s largest highway infrastructure initiative, aims to develop 34,800 kilometers of national highway corridors with an investment of Rs 5.35 lakh crore.

ICRA noted that pending cabinet approval for the revised cost of Bharatmala Phase-I has negatively impacted project awarding activity, which declined by 48 per cent YoY to 2,595 km during the first seven months of FY2024, compared to 5,007 km in the same period of FY2023.

Hybrid annuity mode

The rating agency anticipates a contraction of over 30 per cent YoY in project awarding activity for FY2024. Mr. Ashish Modani, ICRA VP & Co-Group Head, highlighted that almost 95 per cent of road awards by the Ministry of Roads and Transport and Highways (MoRTH) in the last five years utilised the hybrid annuity mode (HAM) and engineering, procurement, and construction (EPC) route, placing the entire funding burden on the ministry.

Mr. Modani added that the burden on MoRTH for BOT (Toll) projects is lower, prompting a shift in focus toward such projects due to substantial cost escalation in BMP and increased funding requirements. ICRA pointed out that the average number of bidders for EPC and HAM projects was 15 and 8, respectively, while for BOT (Toll) projects, it remained below 5.