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No more shortcuts! Roads ministry tightens stricter rules for highway projects; aims to ensure quality, speed

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NEW DELHI: The ministry of roads has implemented stricter qualification requirements for bidding on road projects under hybrid annuity model (HAM) and engineering, construction and procurement (EPC) mode. These enhanced criteria aim to ensure superior construction quality of highways and expressways whilst securing timely project completion.The revised guidelines, detailed in a circular from the ministry of road transport and highways, specify higher financial prerequisites for bidders, enhanced scrutiny of sub-contracting experience, and revised definitions for highways and core sector projects.The modifications arrive as the government prepares to allocate 124 road projects for 2025-26, valued at Rs 3.5 lakh crore, with HAM accounting for over 80 projects.For HAM projects, the financial capacity requirement has increased to 20% from 15% of estimated project cost, whilst consortium member net worth requirements have risen to 10% from 7.5%. “This will ensure large companies with deep pockets bid for projects and deliver quality construction within the set timelines,” ET reported, quoting an industry executive.Regarding EPC projects, bidder net worth requirements have doubled to 10%, whilst annual turnover prerequisites have increased to 20% of estimated project cost. The updated highways definition excludes railways, metro rail and ports, which now fall under the core sector classification for both HAM and EPC projects.The government is re-evaluating eligibility norms for highway and infrastructure projects after a high number of delays caused by earlier relaxed financial thresholds. These lower thresholds were introduced to allow smaller contractors to participate, but many lacked the financial strength and capacity to deliver on time.According to CareEdge Ratings, 55% of the 374 hybrid annuity model (HAM) projects awarded between 2015 and 2024 were delayed by more than six months. Earlier in Parliament, union road transport minister Nitin Gadkari stated that as of March 2024, 419 out of 952 ongoing road projects, about 44% were running behind schedule due to various factors including financial constraints and delays in clearances.

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