Road builders may be liable for 10 years

Road builders may be liable for 10 years

The Ministry of Road Transport and Highways is considering doubling the defect-liability period under engineering-procurement-construction (EPC) contracts to 10 years, a move which is aimed at cutting down on the road maintenance cost for the government.

It is also expected to prompt contractors to improve the quality of construction, thereby reducing road accidents. The ministry is in talks with stakeholders and will soon firm up the proposals, a senior government official told ET.

“We are doing expert consultation on increasing the defect-liability period under EPC contracts to 10 years as the ministry is keen on improving the quality of construction,” the official said on the condition of anonymity.

Under the EPC mode of road construction, the maintenance of national highways is the responsibility of the central government after the defect-liability period is over. The contractor is responsible for maintenance during the defect-liability period.

107669895

The ministry has earmarked Rs 2,600 crore for road maintenance in 2024-25, the same as the budgetary and revised estimates for 2023-24 but a tad higher than the Rs 2,573.66 crore spent in 2022-23.

Maintenance of national highways by the Centre is financed from the Central Road Infrastructure Fund. The works are executed on an agency basis by state public works departments, the Border Roads Organisation, National Highways Authority of India and the National Highways & Infrastructure Development Corporation.

“Defect liability helps in ensuring that the contractors build roads keeping a longer timeframe in mind. While it’s good to have a longer period, it puts at risk contractors of claims which are beyond their control,” said Jagannarayan Padmanabhan, senior director and global head, consulting, at Crisil Market Intelligence & Analytics. Under the Bharatmala Pariyojana, the government had awarded road projects with an aggregate length of 25,713 km at a capital cost of ₹7,81,845 crore till December 2022. Out of this, construction of 14,317 km, or 56% of the total road length, had been approved under the EPC mode. Work for another 10,989 km, or 42%, was awarded under the hybrid annuity model and the remaining 2%, or 408 km, under the build-operate-transfer (BOT) contracts.

Going forward, the ministry plans to award bigger road projects under the BOT mode in which the maintenance liability lies with the contractors. For projects up to ₹500 crore, EPC will continue to be the preferred mode.

For more news like this visit The Economic Times.