NHAI road award in H1 FY’23 drops 60%: Crisil

The state-owned road building agency has floated tenders worth about 2,200 km so far this fiscal, which is 36 percent higher than the corresponding first half of the last fiscal. The NHAI road could award only 777 km of road projects in the first half (April-September) of the current fiscal, which is a three-year low, rating agency Crisil said in a report on Thursday. This is also a 60 percent drop over the corresponding period last year.

The state-owned road building agency has floated tenders worth about 2,200 km so far this fiscal, which is 36 percent higher than the corresponding first half of the last fiscal.

“Slackened pace of execution and highly inflated prices of key input materials owing to uncertainties arising out of global geopolitical tensions, have acted as major impediments to contract awarding momentum,” Crisil analysts said in a latest sectoral note.

Considering the ramp-up that typically happens in the fourth quarter, awarding in the second half of the fiscal is expected to improve substantially. Nonetheless, awarding for the full fiscal is still likely to be moderate.

“We expect 4,800-5,200 km of awards this fiscal, much lower than the 6,306 km awarded last fiscal,” the rating agency noted.

Of the 777 km awarded in the first half of this fiscal, hybrid annuity model (HAM) projects cornered a healthy 51 percent share, while engineering, procurement, and construction (EPC) accounted for the rest.

The shares are expected to remain at current levels for the full fiscal as well, with HAM accounting for 45-50 percent, EPC for 45-50 percent and build-operate-toll (BOT) for less than 5 pepercentHAM is a hybrid model created by combining elements of the EPC and BOT.

“Sharp rise in commodity prices and complex project awards in difficult terrains warranted developers to seek a higher premium to maintain their margins,” the report pointed out.