Government expenditure on road projects continues to score over other areas of infrastructure spending. Infra-Track, a report by Emkay Global Financial Services Ltd, points out that in November alone, roads comprised 59% of the tenders issued. This represents a growth of 62% in value terms over the year-ago period.

And this trend holds true not just with tenders issued. Contracts, too, have been awarded at a rapid pace in this segment. However, there is a shift towards engineering, procurement and construction (EPC) options. Analysts say that hybrid options for project funding are coming to the fore, where government and private firms share the cost in a 40:60 ratio. This is expected to ease cash flow pressures on construction companies.

Competition, too, is easing. The Emkay reports say that in the EPC projects, out of the 35 projects awarded, 13 were bid at a discount of 1-20% to benchmark cost, two at par, while 12 projects went at a premium of about 1.4-28%—something that was not seen in the recent past.

Note that while the railways recorded a huge jump in November, compared with a year ago, tendering activity has been very erratic.

Among the other segments, water supply and community service tenders increased reasonably, while the power distribution segment was subdued.

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