BHARATMALA to provide sizeable opportunities for road developers

Bharatmala Pariyojana (BMP) programme was approved by the Cabinet Committee on Economic Affairs (CCEA) on October 24, 2017 to address the critical infrastructure gaps through development of economic corridors, inter corridors and feeder routes, national corridor efficiency improvement, border and

BHARATMALA to provide sizeable opportunities for road developers
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Bharatmala Pariyojana (BMP) programme was approved by the Cabinet Committee on Economic Affairs (CCEA) on October 24, 2017 to address the critical infrastructure gaps through development of economic corridors, inter corridors and feeder routes, national corridor efficiency improvement, border and international connectivity roads, coastal and port connectivity roads and greenfield expressways. BMP phase-I envisaged development of 24,800 km national highways and residual 10,000 km of highways pending under erstwhile National Highway Development Program (NHDP) by FY2022, at an estimated outlay of Rs. 5.35 trillion translating to cost per km of Rs.15.52 crore. As per the initial plan, this was planned to be incurred during the five-year period between 2017-2022.

The objective of the programme is optimal resource allocation for a holistic highway development/improvement initiative to re-define road development and have a macro approach while planning expansion of the national highways network. To achieve this, national highways are categorised into national corridors, economic corridors and inter-corridors. Additional emphasis is also laid on feeder routes to address first and last mile connectivity challenges.

BMP is implemented by three agencies, namely, the National Highways Authority of India (NHAI), Ministry of Road Transport & Highways (MoRTH), and the National Highways & Infrastructure Development Corporation Limited (NHIDCL). NHAI has a mandate to develop 22,660 km out of the 24,800 km length to be developed under the BMP phase-I.

In terms of progress, around 59% of BMP phase I (20,632 kms) was awarded and 7,375 km of road length has already been constructed till December 2021.

The estimated project cost for completion of BMP almost doubled to Rs. 10.64 trillion primarily due to increase in land acquisition costs and steep rise in input costs. Further, average cost of award stood at Rs. 31.6 crore per km which is 103% higher than initial estimated cost of Rs.15.52 crore per km.

BMP witnessed the highest award of 7,396 kms in FY2018, after which the awarding activity slowed down. Awarding activity was rather muted in FY2019, compared to the previous years, at 2,222 km due to general elections in FY2019.Post this, the awarding activity by NHAI improved in the last three years to 3,211 kms in FY2021, 4,818 kms for FY2021 and estimated at 5,500 kms for FY2022. The awarding activity has been slow in the past four years on account of challenges faced in land acquisition while Covid-19 outbreak impacted the awarding activity in the last two years.

Given that 14,167 kms is yet to be awarded as of December 2021, ICRA expects the Bharatmala awarding activity to get completed by FY2023. In terms of cost, projects worth Rs. 4.12 are yet to be awarded which would result in sizeable opportunities for the road developers in the medium term.

Classification Total Length (KM) Phase I (KM)
Economic Corridors 26,160 9,000
Inter-corridor Roads & Feeder Roads 15,400 6,000
National Corridor Efficiency Program 13,049 5,000
Border & International Connectivity Roads 5,198 2,000
Coastal & Port Connectivity Roads 3,298 2,000
Expressways 1,837 800
BM Total 64,942 24,800
Residual NHDP   10,000
BM + NHDP   34,800
Source: Morth

 

 

 

– Vinay Kumar G

Assistant Vice President and Sector Head, Corporate Ratings, ICRA

 

 

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