NHAI to increase project cost

New Delhi: The National Highways Authority of India (NHAI) has decided to increase the costs of projects by 10-20 per cent to make them attractive for prospective bidders.

Costs of those projects, whose detailed project reports (DPRs) are based on 2006 prices, will be increased by 20 per cent. And the cost of those projects based on 2007 prices will be increased by 10 per cent, said official sources. NHAI will issue a notification on the issue soon.

The Government hopes that its move to increase project costs, along with the new toll policy, will make the projects attractive for highway developers.

NHAI has been not been able to get a good response from the bidders for about 23 projects for the past few months.

As a result, it has been shifting the last dates for bidding for most of these projects. These are the projects, out of a lot of 53 projects, which are in the financial bidding stage.

The Government had a target to bid out these 53 NHAI projects and six Highways Ministry projects, by December 31 at the most, which now seems unlikely.

Top officials from the Highways Ministry and NHAI recently had a meeting with project financiers and bankers in Mumbai to get their feedback on the projects.

In a related move, the CAG has also recently pulled up NHAI for the quality of DPRs.

For instance, in Tambaram-Tindivanam project, the total project cost estimated by the lowest bidder was Rs 378.70 crore against the DPR estimate of Rs 564.30 crore.

The variation of 33 per cent of the DPR estimate indicated an unrealistic estimation by the DPR consultants, said the CAG in its report.

The report further added that the actual traffic was much lower than the estimates.

This was due to the fact that the DPR consultant had not taken into consideration factors such as monthly concessional passes, multiple trips of vehicles, etc.