Road ministry decides to double 'defect liability period' under EPC contracts to 10 years

New Delhi: Union minister Nitin Gadkari on Wednesday said the government has decided to double the 'defect liability period' to 10 years for contractors of engineering, procurement and construction (EPC) projects.

Currently, under EPC projects, the responsibility for maintenance of national highways lies with the government after the defect liability period (5 years) is over.

"The quality of roads built under EPC mode is not good. The defect liability period under EPC mode is 5 years... and within 3 years, there are lots of problems on roads," Gadkari said at an event here.

The road transport and highways minister noted that the roads built under BOT (build-operate-transfer) or HAM (Hybrid Annuity Model) mode are in good condition because the responsibility of maintenance of roads lies with the contractor and he has to pay the price.

"So now we have taken a decision, any road (built) under EPC mode, we will increase the defect liability period to 10 years from 5 years," he said.

The minister noted that increasing the defect liability period for contractors will force them to make good quality roads.

EPC projects are the ones where the government pumps in money, while the private partners only provide engineering construction assistance.

The HAM model of road construction is where the government partially funds the construction of national highways and BOT or build-operate-transfer is where the construction risk is borne by the private concessionaire with a concession period of 20-30 years.

National Highways Authority of India (NHAI) and National Highways and Infrastructure Development Corporation Ltd (NHIDCL) are mainly responsible for the construction of National Highways and Expressways in the country. Maintenance of National Highways is financed by the Central Road Infrastructure Fund.

Gadkari also stressed on the need for increasing exports and decreasing imports.