This revised forecast is similar to the previous fiscal year's awarding of 8,581 km.
Credit: PTI Photo
Bengaluru: Revisiting its forecast for road contracts given out by the Ministry of Road Transport and Highways (MoRTH), ratings agency ICRA has revised its estimates for the current fiscal year down to 8,500-9,000 km, from its earlier projection of 10,000-10,500 km.
This revised forecast is similar to the previous fiscal year's awarding of 8,581 km.
The report attributed this reduction in road awards to a recent MoRTH circular that stated no new projects will be awarded under the Bharatmala Pariyojana (BMP), with future contracts focussing on corridor-based highway development rather than scheme-based development, making for a significant decline in awarding till date.
In the first four months of FY25, the road contracts awarded stood at 563 km, 50 per cent lower than the 1,125 km awarded in the corresponding period of the previous fiscal.
"The overall project award will remain substantially lower than that of FY21- FY23 levels. Consequently, the growth momentum witnessed by road developers in recent years will moderate in the next 12-18 months,” said Vinay Kumar G, Sector Head, Corporate Ratings, ICRA.
While the engineering, procurement and construction (EPC) model is likely to remain the preferred route for road contracts for the ministry, ICRA expects build, operate and transfer BOT model's share to rise to around 5 per cent in FY25, compared to less than 1 per cent of the orders in the last five years.
The contracts have declined by 31 per cent to 8,551 km in FY24 from 12,375 km in FY23 on account of the delay in pending Cabinet approval for the revised cost of BMP and restrictions on project awards imposed by the model code of conduct.