Highway projects still under execution risks
A Crisil analysis of 92 highway projects being constructed under the build, operate, transfer (BOT) model shows that around half of them are facing implementation risks because of delays in land acquisition and other clearances, and weak wherewithal of sponsors. A majority of these projects were awarded between fiscals 2010 and 2012 after aggressive bidding. The period also saw developers debuting in the BOT space and running into financial issues because of inexperience in estimating risks.

Based on risk classification, Crisil believes 3,520 km of under-construction projects with a sanctioned debt of Rs 33,050 crore face high implementation risk in the near term.

An analysis of the reasons for delays shows that 80 per cent of all under-construction projects have been impacted by issues of land acquisition and clearances. Sponsor support in terms of timely equity infusion and funding cost overruns is critical for such projects. But for half of them, financial health of the sponsor is too weak to ensure timely support.