New Delhi: The Centre looking to fix a “moderate but realistic” highway construction target of 12,000-13,000 km for FY25, two persons aware of the development said, citing a proposed new method of calculation and other factors.
This is lower than the 13,814 km target and the 12,349 km of actual construction achieved last fiscal – the second highest after the record 13,327 km built in covid year 2020-21.
This change is the outcome of increased complexities in highway construction, with access-controlled six-lane and eight-lane roads being built as against highways with far fewer lanes – even single carriageways — as was the practice earlier.
Another reason is the proposed shift in the way the government calculates the length of highways – switching to actual lane kilometres rather than linear method of measuring construction at present. Under the new method, a 10-km stretch of highway with four lanes becomes 40 km in the books.
“Going by this yardstick, linear highway construction target may be lower at around 12,000 km in FY25 or even lower but in terms of lane km added, it could be the highest in any of the previous years as wider, stronger and smoother stretches would be the focus now,” said one of the two persons quoted above.
Targets may be lowered
The other person said that lower highway targets for FY25 may also be considered as, after having “overstated” construction targets in the previous three fiscal years, the government now wants to set more achievable goals for itself.
In FY22 and 23 against a target of 12,000-12,500 km construction, the achievement was 10,457 km and 10,331 km respectively while in last fiscal against 13,814 km target, 12,349 km got built.
Queries sent to the ministry of road transport and highways remained unanswered till press time.
Model code of conduct
“One of the key reasons for a lower target for FY 25 is that the Model Code of Conduct will be applicable for the first two months. We had seen a similar dip in 2019 as well.
The other reason for the lower target is that a lot of projects where the land acquisition and project planning was already completed have been awarded in the last few years. NHAI and the states are now working on similar preparatory activities for the next few years of highways build-out,” said Srishti Ahuja, Partner, Investment Banking, EY.
Big investment likely
“Despite the short-term reduction in target, the sector will see a significant amount of investment as MoRTH has further improved the concession framework for BOT and TOT projects. These recent changes improve the risk-return framework for private sector participation. I expect large infra funds and yield investors to commit more capital for mature assets; the domestic players will continue focus on greenfield build-outs, which they will thereafter monetise,” she added.
According to the first person quoted above, though actual construction target may look a bit lower than the previous year’s record high levels, the big pipeline of projects with government agencies would ensure construction activities to remain closer to actual FY24 levels this year.
It is expected that 12,000-13,000 km-per-year of construction may be maintained over the next few years after which the overall construction may slow down a bit as most highways required in the country would have been built and the focus would shift to maintenance of large-scale construction of new alignments.
Like the trend seen in FY24, when out of total 12,349 km being built, about 9,642 km were lane augmentation or capacity augmentation projects and not strengthening projects (where no new highway is constructed but existing roads are repaired and strengthened) and highest number of broader roads of over 4 lanes were constructed at 5,193 km were built, similar construction would be seen in FY25 onwards. This would mean broader highways than longer ones being built.
Under the Vision 2047 plan, MoRTH is targeting to construct 50,000 km of access-controlled highways that according to officials would add more lane km to the network as most of these would be 4-8 lane networks.
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Published: 19 May 2024, 04:21 PM IST