Fate of some large road projects in limbo.

A final call on the fate of some large road projects awarded by the UPA-II regime - including widening of the 555-km Kishangarh-Udaipur-Ahmedabad bagged by GMR - is likely to fall on the next Government.

This is because some developers will be able to start projects only if the National Highways Authority of India compensates them for escalation in project costs due to delayed clearances.

In such a scenario, even if these projects were to be cancelled, fresh bids cannot be called before project costs are revised. 'The move to revise costs upwards requires Cabinet nod, which is unlikely before the next Government takes charge,' said an official source.

Since the Government gets a premium payout for these projects, it is reluctant to cancel them as well.

The costs of these projects were defined at least three years ago. Since then, construction costs have shot up due to the rise in bitumen, diesel and labour costs.

The Government-defined project costs are important as these help to define the banks’ lending exposure to the project.

HBL