Highway construction on record breaking spree! Work reaches scorching pace

Road contractors just stepped on the gas.

Despite the pandemic, highway construction in April-January this fiscal rose to 30 km/day, from 28 km/day in 2019-20. In the past, it was only in 2018-19 that the pace of building of highways touched the 30 km/day mark. February-March period of the current fiscal is seen witnessing even speedier construction.

While minister for road transport and highways Nitin Gadkari is confident of achieving 40 km/day construction pace soon, many stakeholders also share the optimism.

Usually, construction reaches its peak in the January-May period of year. The pace touched a record of 76 km a day in the week commencing January 8, sources said.

It takes 2-3 years to construct a highway. As on 2019-end, 49,740 km highways were under construction. Construction of one kilometre 10-lane highway is still measured as one km and the same holds true for 2-lane highway.

Providing the highest-ever Rs 1.18-lakh-crore capital outlay for the ministry of road transport and highways for 2021-22 in the Budget, finance minister Nirmala Sitharaman said more than 13,000 km length of roads, at a cost of Rs 3.3 lakh crore, has already been awarded under the Rs 5.35-lakh-crore Bharatmala Pariyojana project. Of this, 3,800 km of the roads have been constructed. By March 2022, another 8,500 km projects would be awarded and an additional 11,000 km of national highway corridor would be completed.

Adjusting for the first 20 days of April 2020 wherein no construction activity was allowed, the execution per day saw a growth of 21% to 30.5 km/day in the first nine months of the current fiscal from 25.2 km/day in the same period last fiscal.

The increasing pace of highway construction, analysts believe, is the result of a slew of relief measures the government initiated in recent times like shifting from milestone-based billing (typically ranging between 45-75 days) to monthly billing and release of retention money, performance security in proportion to the work already executed which have helped in reducing cash conversion cycle favouring the contractors. Road contractors just stepped on the gas.

“The recent relaxation of financial capacity and widening the definition of core sector (technical capacity) by including segments like hospitals, hotels, oil & gas, warehouses, among others, will drive more EPC players towards infrastructure projects, especially road, which is already overcrowded. The competitive intensity is expected to increase manifold. If the liquidity boosting measures are continued; this along with relaxation in qualifications for bidders could result in steep rise in execution- more than 40 km/day going forward,” said ICRA’s Rajeshwar Burla.

IRB Infrastructure’s chairman and managing director Virendra Mhaiskar said that the 50-km/day construction is eminently achievable in the next two years as huge number of projects are being awarded now-a-days and the environment is also conducive for doing business.