Rating agency ICRA has revised its forecast for road project awards by the Ministry of Road Transport and Highways (MoRTH) for FY2025, predicting awards between 8,500-9,000 km, a figure close to the 8,581 km awarded in FY2024. This revision comes in contrast to the earlier projection of 10,000-10,500 km, reflecting ongoing sectoral challenges.
The award of road projects witnessed a significant decline of 31 per cent in FY2024, falling from 12,375 km in FY2023 to 8,551 km. This drop is primarily attributed to delays in Cabinet approval for the revised cost of the Bharatmala Pariyojana (BMP) and the restrictions imposed by the Model Code of Conduct ahead of the General Elections.
In the first four months of FY2025, the road awards stood at just 563 km, down by 50 per cent from the 1,125 km awarded during the same period in FY2024.
Recently, MoRTH clarified that no new additional projects would be awarded under the BMP, with future awards focusing on corridor-based highway development rather than the previous scheme-based approach. The Ministry continues to prioritise the EPC (Engineering, Procurement, and Construction) model for road projects but is gradually shifting towards BOT (Build, Operate, Transfer) toll projects.
However, ICRA highlights the challenges of a significant shift towards BOT projects due to higher equity commitments, traffic risks, and execution complexities. The share of BOT projects is expected to rise to 5 per cent in FY2025, a modest increase compared to less than 1 per cent in the past five years.
The bidding process for EPC and HAM (Hybrid Annuity Model) projects has become increasingly competitive. Since FY2021, bids have consistently been below the authority’s base price, with maximum and median discounts of 46 per cent and 21 per cent, respectively, in FY2024.
In a bid to streamline project allocation, MoRTH recently announced that single bids received in open bidding would be accepted under certain conditions, a move aimed at avoiding re-tendering delays and ensuring smoother project execution.
