COST OF BUILDING HIGHWAYS
The Ministry of Road Transport and
Highways and the Planning Commission
have crossed swords once
again-this time over the cost of
building highways.
NHAI's revised cost estimate submitted
to the Planning Commission seeks
an increase of Rs.2.5 crore per km for constructing
four-lane highways. The B.K.
Chaturvedi Committee had last year
fixed the cost of building four-lane highways
at Rs.9.5 crore per km. The revised
estimate also increases the cost of building
six-lane highways from Rs.10 crore per
km to Rs.13 crore per km.
NHAI attributes the increase to rise in
cost of construction material and the WPI.
The Planning Commission, however, has
vehemently opposed the revised estimate.
Increasing the cost of building highways
at this juncture, the Commission feels,
could pose a serious challenge to mobilising
funds for the highway development
programme. It points out that the cost of
building highways was revised just a year
back and hence the increase being sought
by NHAI owing to rise in cost of construction
material and WPI cannot be accepted.
NHAI's revised plan asking for hike in
the cost of building highways may have
failed to garner the Planning Commission's
approval but it has expectedly found
strong support from road developers.
"There has been all-round escalation in
the cost of building highways," a source
closely associated with the road development
sector told Projectmonitor.
"Last year, there was a 20-25 per cent
increase in the cost of construction
material including steel and cement.
Even bitumen prices went up. In 2007-
08, steel prices went up by 46 per cent.
Besides, the cost of skilled manpower
has also been rising significantly. Therefore,
NHAI is fully justified in seeking an
increase in cost of building highways. It
is not possible for road developers to
bear such drastic cost escalation all by
themselves. If the government does not
agree to NHAI's revised estimate, there
is a possibility that many projects will fail
to attract developers," he said.
The source further added that road developers
were often faced with cost escalation
due to flawed detailed project reports.
"DPRs are prepared by independent
consultants who have no accountability,"
the source said.
"Often, these reports are prepared
without even visiting the actual site.
Also, DPR is prepared almost 1.5 years to
2 years before work on a project begins.
So, the figures stated in it cannot be considered
realistic," he added.
For the time being NHAI's revised cost
estimate for building highways has been
referred to the Committee headed by B.K.
Chaturvedi. The final decision on the matter
is expected to be taken by the empowered
group of ministers on road sector.