Highway projects get three more months of bitumen, diesel cost escalation cover amid West Asia crisis

New Delhi: The ministry of road transport and highways has extended the cost escalation compensation mechanism for bitumen and diesel used in national highway projects by three months, citing persistently high prices amid the ongoing crisis in West Asia.

The extension will be effective from October 1 to December 31, 2026, and will apply to highway projects executed under the engineering, procurement and construction (EPC) model, the hybrid annuity model and performance-based maintenance contracts.

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"Considering the prices of bitumen being in a higher range, validity of the compensation mechanism is being extended till 31.12.2026," the ministry said in a notification. The extension will cover work carried out from April 15 to December 31, 2026, only for projects where the bid due date was before April 1, 2026, it said.

The ministry had earlier introduced a price adjustment mechanism for petroleum, oil and lubricants to mitigate the impact of rising diesel prices on highway construction and ensure uninterrupted construction and maintenance of national highway projects.

"The bulk rate of diesel has been reviewed and observed that the difference between the retail and bulk rates are still in a higher range. Accordingly, validity of the compensation mechanism is being extended for a period from 01.10.2026 till 31.12.2026," it said.

The circular will apply to work carried out from October 1, 2025, to December 31, 2026, only for projects where the bid due date was before April 1, 2026, the ministry added.