New highways plan offers huge scope for construction cos: ICRA

Rating agency ICRA today said the new highways programme, unveiled by the Cabinet yesterday, offers huge opportunities for construction companies.

The government yesterday approved a mega plan to build 83,677 km of highways by March 2022 at a cost of about Rs 7 lakh crore, which includes the ambitious Bharatmala project.

"This could result in significant jump in annual awards - more than 25,000 km per annum over next three years and consequently provides huge opportunities for construction companies," ICRA said in a statement.

NHDP, the largest highways project ever undertaken in the country till date, is being implemented by the National Highways Authority of India (NHAI) since 2000 and as on March 31, 2017, it has completed construction of 26,255 km, and given this track record, completing 83,000 km by FY2022 looks extremely ambitious, Icra said.

"NHDP execution suffered both on account of funding and approval related issues. While the dependence on the private sector investments for the new programme is low when compared to the twelfth five year plan, which could result in faster awards; securing right of way by complying with Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLARR) Act is going to be a challenge," Shubham Jain, VP & Sector Head, Corporate Ratings, said.

He said the success of the programme critically hinges on the pace of land acquisition along with other requisite approvals.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)