Highways programme 30% costlier

The national highways development programme has suffered a capital cost escalation of Rs 50,500 crore, nearly 30 per cent of the initially estimated Rs 169,500 crore, according to the Planning Commission. The projects are spread over seven phases, three of which are now being implemented.

The Planning Commission has informed the Prime Minister's Committee on Infrastructure about the projected cost overrun. It has warned that the excess expenditure will affect the development of other highways in the country.

The National Highway Development Authority (NHAI) has contested this, saying the figures are "inflated". NHAI officials said the Planing Commission had included revised costs of the future phases (phase 4 to 7) of the programme.

"These projects are yet to be cleared by the Cabinet. The increase in cost is, therefore, only notional," an NHAI official told Business Standard.

On its part, the Planning Commission has said that there are serious cost overruns in the second phase itself. Against the original estimate of Rs 5.14 crore per km and the revised estimate of Rs 6.4 crore per km, "the cost per km may exceed Rs 7.65 crore per km, implying a total expenditure of over Rs 50,000 crore in the second phase," the Plan body said.

It added that costs of the three phases that had been approved so far, had escalated by 26 per cent, 25 per cent and 19 per cent, respectively.

The estimated cost of the second phase has shot up from Rs 35,000 crore to Rs 43,632 crore. Similarly, the cost of the third phase of the programme has also shot up from Rs 55,000 crore to Rs 65,197 crore.

The Planning Commission has also pointed out that against the target of awarding contracts for 1,276 km by February 2006 under the third phase of a total of 10,000 kms, only 52 per cent (669 km) have been achieved. The 476-km shortfall has been added to the target for the first quarter of 2006-07.