Whalesbook
Highway Sector Faces Cost Squeeze
The Ministry of Road Transport and Highways is exploring new ways to support highway contractors who are struggling with rapidly increasing costs. The ongoing crisis in West Asia has caused sharp, unexpected price jumps for vital materials like bitumen and diesel, and has also disrupted supply chains.
Proposed Relief Measures
The ministry is expected to announce a second round of relief measures next month. These could offer compensation for commodity price increases that go beyond a certain level. The government is also reviewing extensions for project deadlines on a case-by-case basis. These steps aim to ensure that projects under the Engineering, Procurement, and Construction (EPC) and Hybrid Annuity Model (HAM) frameworks continue to receive timely payments, which is essential as they rely heavily on government funding.
Contractors Want More Support
While the ministry provided some temporary relief in April, the National Highways Builders Federation found it was not enough. The federation argues that the current geopolitical situation is an unusual challenge that requires stronger government support. They warn that without it, projects could stall and contractors could face serious financial difficulties.