More relief steps may be on the way for highway contractors as West Asia war drags

New Delhi: The road transport and highways ministry is considering additional relief measures for highway contractors to minimise the financial impact on the sector in case the West Asia crisis drags on.

The second round of relief measures, expected to be rolled out next month, could include compensation for actual increase in prices of commodities beyond the threshold, extension of timelines on a case-to-case basis and ensuring continuous and timely cash flow from the Centre to highway developers under engineering, procurement and construction (EPC) and hybrid annuity model (HAM) projects. EPC projects are primarily funded through government budgetary allocations while HAM projects are funded through a 40:60 partnership between the government and private developers.

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"The ministry is monitoring the situation on a daily basis and all relevant measures will be taken at an appropriate time," said a senior government official, who did not wish to be identified.

The government is constantly seeking feedback from the industry to assess the financial impact on the sector, according to the official.

"Necessary interventions will be made to ensure road projects are not stuck and the projects continue to be viable for the contractors," the official added.

On April 1, the ministry had provided interim relief measures to highway contractors for a period of three months, including relaxation in payment provisions and adjustments in price indexation methodology.

However, the National Highways Builders Federation said these were not commensurate with the severity of the prevailing situation.

"The current scenario is clearly an exceptional and unprecedented circumstance, driven by global geopolitical developments. This has resulted in sharp and abnormal increase in prices of bitumen, diesel, and other essential inputs, disruption in supply chains and logistics and significant financial stress on ongoing projects," the federation said in a submission to the road transport and highways ministry last week.