New Delhi: The National Highways Authority of India (NHAI) may reduce costs required to build new stretches of highways by cutting corners to help developers till the slowndown lasts.
This would be an extension of its policy of restructuring about 17 projects that failed to get any response from bidders, which would lower their costs by as much as 20%, an official of the highways authority said, requesting anonymity.
The restructuring involves reducing the number of lanes and doing away with the requirement of building what it considers non-essential structures such as flyovers, overbridges and service roads. “We are looking into it (the restructuring) from a technical and safety consideration and if we feel that it is warranted, considering the funding situation, we will do it,” another official with the authority said, who also declined being named.
Fast lane: The Delhi-Jaipur expressway. The highways authority is trying to cut costs to help developers during the slowdown. Ramesh Pathania / Mint
“I think it is a disaster,” Siddartha Das, national public-private partnership practice leader, transaction advisory services for consulting firm Ernst and Young Pvt. Ltd, said.
Das said by reducing certain components of a highway project, the authority would be undermining efforts to build high-quality highways in India.
Highway developers have been hit by the double whammy of high interest rates and rising commodity prices. Increased risk perception among lenders have led to squeezed project finance flows and added to their woes.