Tezzbuzz Desk- The effect of increasing tension in West Asia is now visible on India's infrastructure projects as well. The National Highways Builders Federation (NHBF), an organization of companies involved in the construction of National Highways, has demanded from the Central Government to extend the period of special relief measures applicable for road construction projects by three more months. The federation says there is increasing financial and operational pressure on highway projects due to continuously fluctuating costs related to fuel, bitumen, logistics, shipping and supply chain.
According to NHBF, the ongoing geopolitical tension in West Asia is impacting the global supply chain. This is having a direct impact on the prices and availability of essential materials used in road construction. In particular, fluctuations in the prices of bitumen and fuel have increased the costs of construction companies. Apart from this, due to tension in sea routes, the problem of cost of freight transportation and delay in shipment is also coming to the fore. The Federation has requested the Ministry of Road Transport and Highways to continue the existing relief measures even after the deadline of September 30. The NHBF wants these measures to be extended for three months at least until the end of December. The organization says that if the relief is ended suddenly while market conditions are still volatile, there could be additional financial pressure on construction companies.
The NHBF has told the government that highway contractors and concessionaires are facing circumstances which are beyond their direct control. Cash flows of many projects may be affected due to rising costs of fuel and construction materials as well as uncertainty in logistics. This is likely to have a greater impact, especially on projects running at low margins. The Federation says that extending the duration of relief measures will help companies continue projects in the current circumstances. This can help maintain the pace of construction work as well as reduce potential disputes and financial claims related to timelines. According to NHBF, the relief will provide the necessary financial confidence to contractors and concessionaires amid the uncertainty in the market.
The impact of cost overruns in road construction projects is not limited to companies alone. If there are persistent disruptions in the supply chain or construction materials are not available on time, project timelines may be affected. This may have an impact on the process of building national highways and making them available to the public on time. NHBF has said that continuing the relief measures in the current circumstances can help maintain the financial viability of critical national highway projects. The organization believes that this will help in avoiding stoppages or unnecessary delays in projects. Now all eyes are on the decision of the Central Government and the Ministry of Road Transport and Highways. If the government extends the relief period on the demand of NHBF, it may provide additional time and financial relief to highway construction companies amid the current global instability. At the same time, the situation in West Asia and changes in the global supply chain will remain important factors for the cost and pace of India's infra projects in the coming months.