The Bharatmala Pariyojana Plan (BMP) project cost has risen to Rs 10.64 lakh crore, more than doubling due to a sharp rise in input costs and rising land acquisition costs, the agency said. ICRA rating. Bharatmala Pariyojana, India's largest road infrastructure initiative, aims to develop 34,800 kilometers of national highway corridors with an investment of Rs 5.35 lakh crore.

ICRA noted that the Cabinet's pending approval for the revised cost of Bharatmala Phase-I has negatively impacted project award activity, which fell 48 per cent year-on-year to 2,595 km during the first seven months of FY2024 from 5,007 km in the same fiscal year 2023. .

Hybrid Annuity Mode

The rating agency expects a year-on-year contraction of over 30 per cent in project award activities by fiscal 2024. Ashish Modani, vice-chairman and co-head of ICRA, highlighted that nearly 95 per cent of road awards awarded by The Ministry of Road Transport and Highways (MoRTH) in the last five years used Hybrid Annuity Mode (HAM) and Engineering, Procurement and Construction (EPC) route, which places the entire financial burden on the ministry.

Modani added that the burden on MoRTH for BOT (Toll) projects is lower, prompting a shift in focus toward such projects due to substantial cost escalation in BMP and increased funding requirements. ICRA pointed out that the average number of bidders for EPC and HAM projects was 15 and 8, respectively, while for BOT (Toll) projects, it remained below 5.