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New NHAI norms may slow down project awards - Icra

Infra News - Published on Thu, 03 Jan 2019

Image Source: Moneycontrol
PTI reported that the recently revised standard contract agreement for national highways Centrally-sponsored road works proposed to be implemented on EPC basis could lead to a decline in the pace of new project awards in the short to medium terms, with the pending land acquisition being a primary constraint. Rating agency Icra said in a weekend report "While the pipeline of projects to be awarded remains strong with the Bharatmala Pariyojana gaining ground, the land acquisition issues could delay the awarding." The target for FY19 is to award 20,000 km projects with majority to be awarded on the EPC mode, it noted.

Icra said that "Given the land acquisition related issues, and stringent provisions in the revised EPC contract agreement, it is likely that the NHAI will proceed with awarding of contracts only once the land acquisition is in advanced stage."

However, it noted that the revision is expected to facilitate execution of road contracts by reducing bottlenecks faced by contractors particularly related to right of way, and clearances.

The report further says in case of delays due to default on the part of the contractor, provision of deemed debarment for bidding in new projects is expected to push pressure on contractors to timely complete projects.

Mr Abhishek Gupta, an assistant vice-president at the agency, said that "The changes in the EPC agreement are steps in positive direction. With the stricter provisions for damages, the liability has increased for both the authority and contractor to meet their obligations in a time-bound manner. This in turn is expected to facilitate timely execution. However, over the short-to-medium term, this could lead to a decline in the pace of new project awards, with the pending land acquisition being a primary constraint."

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Posted By : Joykumar Irom on Thu, 03 Jan 2019
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