Road-work awards to drop by 40-43% YoY in FY24, those by NHAI to drop by 50%: ICRA

road execution will remain strong this fiscal at an estimated 12,000-12,500 km, said the analysts. (Representational image).

Awards for roadwork by the Ministry of Road Transport and Highways (MoRTH) is expected to decline by 40-43 percent year-on-year (YoY) in FY24, according to ICRA.

The analysts expect the road awards to fall to 7,000-7,500 km, from 12,375 km in FY23.

In that, the road awards from National Highways Authority of India (NHAI) is expected to fall by more than half to 3,000 km from 6,003 km a year ago. The road awards from non-NHAI entities are expected to fall to 4,000-4,500 km to 6,372 km a year ago.

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"Pending the Cabinet approval for the revised cost of Bharatmala Phase-l, project awarding activity in the recent quarters has taken a beating," said Vinay Kumar G, Sector Head, Corporate Ratings, ICRA.

"While Engineering, Procurement and Construction (EPC) is likely to remain the preferred route of road awards for MORTH, it is gradually shifting its focus to Build, Operate and Transfer (BOT) (Toll) projects, given the lower funding support required from the ministry in BOT-Toll mode. The BOT-Toll awards accounted for less than 5 percent of the orders in the last five years, and its share is expected to remain at similar level in FY2024," he added.

Vinay Kumar said that a major part of the 900 km of highway stretches that was to be awarded under BOT-Toll mode in FY2024, was likely to be spill over to FY2025.

Meanwhile, road execution will remain strong this fiscal at an estimated 12,000-12,500 km, said the analysts, adding that this was supported by increased capital outlay and focus on completion of projects ahead of the Lok Sabha polls.

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ICRA's Vinay Kumar said, “Road execution has improved by 10.2 percent to 4,474 km in 7M FY2024 from 4,060 km in 7M FY2023 owing to the Government’s focus on execution and higher budgetary allocation. The ministry has spent 64 percent of the total outlay of Rs. 2.59 lakh crore till 7M FY2024."

He added, "A healthy pipeline of under construction projects of 43,856 km as of October 2023 along with the focus on project completion ahead of the General Elections, is expected to increase road execution to 12,000-12,500 km in FY2024.”