Crisil Reports 60% of National Highway Projects Under Hybrid Annuity Model Face Delays
60% of national highway projects on annuity model facing delays: Crisil
Business Standard
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Crisil Ratings has revealed that 60% of national highway projects in India under the Hybrid Annuity Model (HAM) are experiencing delays, averaging over 11 months. The primary cause is the non-availability of right of way, with inflation indexation helping to mitigate the impact on credit risk profiles despite increased project costs.
- 0160% of under-construction HAM projects are delayed by over 11 months on average.
- 02Non-availability of right of way is the main reason for 75% of the delays.
- 03Delays have increased project costs by 5-10% on average.
- 04Around 90% of delayed projects received extension approvals from authorities.
- 05Completed HAM projects also face delays, averaging 9.5 months.
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Crisil Ratings reported that 60% of national highway projects in India under the Hybrid Annuity Model (HAM) are delayed, with an average delay of over 11 months. The primary cause of these delays is the non-availability of right of way, affecting 75% of the projects. Other contributing factors include delays in obtaining environmental clearances, design approvals, and local authority clearances, as well as force majeure events like heavy rains and protests. Despite these challenges, 90% of the delayed project lengths have received extension approvals, which helps limit the impact on the credit risk profiles of the concessionaires. However, the delays have led to increased project costs by an estimated 5-10% on average. Completed HAM projects also face delays, averaging 9.5 months, but similarly received extension approvals, mitigating credit risks.
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The delays in highway projects could lead to increased travel times and costs for commuters, as well as potential economic impacts in regions dependent on these infrastructures.
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