Bharatmala Project may get delayed by 4 years due to COVID-19: ICRA

The first phase of Bharatmala was supposed to be completed by 2021-22 but now it may only be completed by 2025-26 due to COVID-19. 

Created On: Jun 10, 2020 20:01 IST
Bharatmala
Bharatmala

Indian government’s ambitious Bharamala Project may get delayed by four years due to the COVID-19 pandemic, as per ratings agency ICRA. 

The first phase of Bharatmala was supposed to be completed by 2021-22 but now it may only be completed by 2025-26 due to delays caused by nationwide lockdown to contain coronavirus pandemic.

Also read: Government approves Bharatmala

Key Highlights 

•  A total of 246 road projects with an aggregate length of about 10, 100 km were awarded under the Phase-I of Bharatmala till February 2020 at a cost of Rs 2.38 lakh crore. 

•  The average cost of award stood at Rs 23.80 crore per km, which is 54 percent higher than the initial estimated cost of Rs 15.52 crore per km. The land acquisition cost for NHAI also increased at a CAGR of 27 percent from Rs 0.21 crore per hectare in FY2007 to around Rs 4 crore per hectare in FY2019.

•  A total length of around 34,800 km roads are being considered under BMP Phase-I, which also includes 10,000 km of balance road works under NHDP. The estimated outlay for Phase-I of the project was Rs 5.35 lakh crore, spread over five years between 2017-2022, as per the initial plan.

•  As per the revised funding plan that was drawn in September 2019, the dependence on market borrowings for the project increased substantially by 72 percent to Rs 3.59 lakh crore. On the other hand, the budgetary allocations and contribution from central road and infrastructure fund were reduced by 46 percent to Rs 1.83 lakh crore. Hence, the borrowings of NHAI are expected to increase significantly and peak by FY2023 or FY2024.

•  Till March 31, 2020, around 21 percent of the Bharatmala project execution was complete. Post-March, the pace of execution for FY2021 is expected to remain low due to productivity loss and availability of limited labour due to coronavirus outbreak. 

•  The work is expected to later pick up pace by 10-15 percent in FY2022 before peaking in FY2024. The pending works are expected to be completed by FY2026.

Also read: Know all about Bharatmala Project

COVID Impact on Bharatmala

The uncertainty caused by COVID-19 and the consequent impact on valuations could delay the asset monetisation plan of NHAI through toll-operate-transfer (TOT) auctions and launch of infrastructure investment trust (InvIT).

The plans are expected to take off by the end fo FY 2021, depending largely on how quickly normalcy is restored post-COVID. 

Background 

The Cabinet Committee on Economic Affairs (CCEA) had approved the Phase-I of Bharatmala Pariyojana along with other programmes on October 24, 2017.

As of March 2020, 47 percent or 16,219 km of the Bharatmala project was pending to be awarded. The project awards are expected to remain in the range of 3,000-3,200 km in FY2021 and increase thereafter. The awarding activity is expected to get completed by FY2023 only due to the current delay caused by coronavirus pandemic. 

Bharatmala Pariyojana 

Bharatmala Pariyojana is an ambitious Road and Highways project of the central government. It was approved launched by the government in October 2017. 

Under Bharatmala, 83,677 km of highways will be built across the nation connecting states including Rajasthan, Gujarat, Haryana, Punjab, all Himalayan states, West Bengal, Sikkim, Assam, Arunachal Pradesh, Manipur and Mizoram. 

Special focus would be laid on providing connectivity to rural areas including tribal and backward areas under the initiative.

 

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