Payment norms for highway builders relaxed

New Delhi: The government has eased payment rules for highway builders and accelerated cost adjustments to blunt the impact of commodity price volatility triggered by the Iran war.

The road transport and highways ministry will shift to monthly payments for contractors and concessionaires on engineering, procurement and construction (EPC) and hybrid annuity model (HAM) projects, besides shortening the price-adjustment cycle to one month from three, according to a person familiar with the matter.

The measures will be in force for three months, from April 1 to June 30, or until global conditions stabilise.


The move is aimed at stabilising cash flows for developers grappling with higher input and logistics costs. Payments, typically released on a milestone or pro-rata basis under EPC and HAM contracts, will now be disbursed monthly for work meeting quality standards. Price adjustments and escalation dues will also be settled alongside these payments.

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Officials said the changes are designed to offset surging fuel and material costs. Developers estimate project costs could increase by up to 10%, driven by a 20-25% jump in bitumen and fuel prices and a 15-18% increase in electrical component prices.

The government has assured adequate bitumen supply and is closely monitoring prices and availability to prevent disruptions to large projects.