Till February 2020, a total of 246 road projects with an aggregate length of about 10,100 km were awarded under BMP Phase-I at a total cost of Rs 2.38 trillion.
"The Bharatmala Pariyojana (BMP) Phase–I is likely to be delayed by four years and get completed by FY2026 instead of earlier envisaged FY2022," ICRA said.
Saying that till February projects worth Rs 2.38 trillion were awarded under BMP Phase-I, ICRA said the average cost of the award stood at Rs 23.80 crore per km, 54 per cent higher than initial estimated cost of Rs 15.52 crore per km.
The land acquisition cost for NHAI, it said, increased at a compounded annual growth rate (CAGR) of 27 per cent from FY2007 to FY2019 from Rs 0.21 crore per hectare to around Rs 4 crore per hectare.
This, along with prudent bidding by developers at a premium, when compared to NHAI''s base price has resulted in significantly higher awarded cost for BMP Phase-I when compared to initial estimates.
Further, according to ICRA's estimates, the prevailing uncertainty due to Covid-19 and the consequent impact on valuations could delay asset monetisation plan of NHAI through toll-operate-transfer (TOT) auctions and launch of infrastructure investment trust (InvIT).
Depending on how quickly normalcy is restored, these plans could take off by end of FY2021. Therefore, 2020 is likely to be another year of muted awards.
Shubham Jain, Senior Vice President, Corporate Ratings, ICRA said, "As on March 2020, 16,219 km of BMP (around 47 per cent of BMP) was pending to be awarded. We expect the awards to remain in the range of 3,000-3,200 km in FY2021 and increase thereafter once NHAI completes its proposed fund raising through infrastructure investment trust." "With pick up in awards starting FY2022, the Bharatmala awarding activity is expected to get completed by FY2023 only," he added.
The Bharatmala scheme was approved by the Union Cabinet in October 2017, and was aimed at constructing 20,000 km of highways connecting the western and eastern parts of the country at an estimated investment of Rs 7 trillion. In the first phase, to be undertaken over three-five years, the project would cost Rs 5.5 trillion. A total of around 34,800 km roads are being considered in BMP Phase-I, which also includes 10,000 km of balance road works under NHDP.
Estimated outlay for BMP Phase-I was Rs 5.35 lakh crore spread over five years between 2017-2022, according to the initial plan.
According to the revised funding plan dated September 2019, the dependence on market borrowings for BMP increased substantially by 72 per cent to Rs 3.59 trillion, while the budgetary allocations and contribution from central road and infrastructure fund fell by 46 per cent to Rs 1.83 trillion.
Consequently, borrowings of NHAI are expected to increase significantly and peak by FY2023 or FY2024; at the same time, NHAI''s asset monetisation also remains critical to meet the funding requirements of BMP Phase-I, ICRA said.
"About 21 per cent of BMP execution has been completed as on March 31, 2020. Given the limited labour availability and productivity loss due to Covid-19, ICRA expects the pace of execution for FY2021 to remain low at 3,104 km and thereafter witness an increase by 10-15 per cent in FY2022 before peaking in FY2024. The pending works are expected to be completed by FY2026," Jain said.