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Time of India
4 days ago
- Business
- Time of India
India needs massive investments for Net-Zero Goal by 2070; Private sector will be vital: Moody-ICRA
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel According to a joint report by Moody's Ratings & ICRA , highlights that India will require a huge investment in order to meet ambitious 2070 net-zero emissions norms particularly in the power report projects that over the next decade, these investments are projected to constitute 2 per cent of country's real GDP for the electricity value chain, encompassing power generation, storage, transmission and report also suggests that the country must manage the complex balance of energy security, affordability, and the transition to cleaner India's fast-growing economy will continue to rely on coal in the short to medium term. It adds a 32 to 35 per cent increase in coal-based generation capacity (around 70-75 GW) over the next 10 years, alongside the addition of 450 GW in renewable capacity."We expect the private sector to remain active in India's renewable energy sector, while government-owned companies will also increase their role," said Abhishek Tyagi, a Moody's Vice President and Senior Credit further added that, "Solar and wind power will dominate new generation capacity additions over the next 20-25 years, with smaller nuclear and hydropower additions."Furthermore, the report also expects a slowdown in road project execution in the near term despite a healthy FY2026 budgetary outlay of Rs 2.72 trillion for the Ministry of Roads, Transport and Highways (MoRTH)."With road awarding projected to improve only in second half of FY2026, the revenue growth of road developers is likely to remain subdued over the next 12-15 months, as it takes 6-9 months from project awarding to on-ground execution (first billing milestone)," said Ashish Modani, ICRA's Senior Vice President and Group Head, Corporate contrast, ports and data centers are emerging as key growth areas. Under the Maritime India Vision 2030, the government has committed substantial capex to expand port capacity. ICRA anticipates a 3 to 5 per cent increase in cargo volumes in FY2026, led by containerised cargo, petroleum products, and fertilisers, though global trade and tariff uncertainties pose risks.
Hindustan Times
15-05-2025
- Business
- Hindustan Times
MoRTH's stricter bidding rules to ease competition in road projects: ICRA
The decision by the union ministry of road transport and highways (MoRTH) to introduce a new additional performance security (APS) regime last month for all central government road projects (such as national highways) is expected to result in better road quality. APS is a financial guarantee required to be paid by private contractors for quoting significantly below the estimated base price and acts as a safeguard for the government. This is over and above the standard performance securities, which are forfeited in instances of default. A higher APS ensures that only serious and financially stable contractors participate in bidding, ensuring better quality and timeliness. On April 30, MoRTH, in a circular, had said that this APS regime is being introduced to deter abnormally low bids in the national highway projects. Under this new circular, now APS will be triggered if bids are lower than 10% of the estimated project costs and it will be set at 0,1% for every percentage of bid price below 10% and 0.2% plus an additional 1% of the bid price in instances when the bid price is 20% or lower than the projected cost. This new circular, which is effective immediately, will remove the 3% cap (of the projected cost) on APS and remove the threshold of a 20% discount to be triggered, which was the case previously. The National Highway for Electric Vehicles (NHEV), a central government-promoted pilot for building electric highways' national project director Abhijeet Sinha said the previous cap of 3% was unrealistic to impose strict adherence to quality and timelines. He said, 'While it may increase upfront financial commitments for bidders, it serves a larger strategic purpose of preventing post-award costs inflation through change requests and claims. ' Ashish Modani, group head, corporate ratings at ICRA, said this move by the government will deter speculative bidding and promote realistic pricing. 'But in the near term, it is expected to put strain on the credit profiles of small and mid-sized contractors, particularly those with limited-sized bank guarantee limits. The requirement for cash margins to secure additional bank guarantees will increase working capital needs, potentially impacting bidding capacity, revenue growth, and coverage metrics due to higher finance costs.' But he said in the medium term, the policy will eventually result in better quality of road construction. Echoing Modani's comments, Prabhakar Kumar, government consulting head at REPL, a listed infra consultant company, said this move by the government sends a clear signal that only serious and financially sound players should participate in national-level tenders and cost-cutting at the expense of quality will no longer be rewarded. But he added, 'At the same time, the government should ensure timely payments to contractors for quality and timely work completed. A statement from ICRA said that most construction projects were awarded at significant discounts, at a median of around 25% between January 2024 and March 2025. Analysis by the ratings agency showed that the effective performance security will differ by 1% of the project cost at the 20% discount scenario to 2% at a 40% discount scenario due to the policy change. Currently, the government is facing challenges both in the of quality and timeliness of highway projects, with MoRTH lowering highway construction targets in recent years, and concentrate on quality. In January, the Parliament was told that since March 2024, nearly 44% of all national highway projects worth ₹150 crore and above, across 32 states and union territories, were facing delays. In a separate revelation, the government had said there were at least 59 cases of major deficiencies, including cave-ins during the previous five financial years ending FY 24, including provisional data for FY 25.
India Gazette
14-05-2025
- Business
- India Gazette
MoRTH's stricter bidding norms to ease competition in road projects: ICRA
New Delhi [India], May 14 (ANI): The tightening of bidding norms by Ministry of Road Transport & Highways (MoRTH) through requirement of additional performance security (APS) will ease competitive pressure in Central Government Road projects, said credit rating agency ICRA. Previously, the relaxed bidding norms had intensified competition in Central Government Road projects, with most construction projects being awarded at significant discounts - a median around 25 per cent between January 2024 and March 2025. However, the policy may exert some strain on the credit profiles of small and mid-sized contractors, particularly those with modest bank guarantee (BG) limits, said the rating agency. In August 2022, the Ministry had imposed APS for projects awarded substantially below the base price; however, the APS requirement was capped at 3 per cent of the overall project cost. As per the recent circular, the capping of 3 per cent has been removed. Giving more insight, Ashish Modani, Group Head, Corporate Ratings, ICRA, said, 'The hike in performance security requirement is a positive step towards execution discipline, which will deter speculative bidding and promote realistic pricing. The policy though, in the near term, is expected to put some strain on the credit profiles of small and mid-sized contractors, particularly those with limited-sized BG limits.' He said that the requirement for cash margins to secure additional BGs will increase working capital needs, potentially impacting bidding capacity, revenue growth, and coverage metrics due to higher finance costs. However, on a medium term the policy eventually will encourage serious well-capitalised bidders for participation, to get desired output of performance in terms of quality of road construction, Modani added. The MoRTH has introduced a revised framework for APS, aimed at deterring abnormally low bids in the national highway projects. The revised Abnormally Low Bid Price (APS) norms introduced in April 2025 bring significant changes compared to the previous guidelines from August 2022. The trigger threshold for APS has been tightened, now applying to bids that are lower than 10 per cent of the estimated project cost, compared to the earlier 20 per cent threshold. The APS calculation has shifted from a flat 20 per cent of the difference between the estimated cost and the bid price to a more nuanced, two-tiered approach. For bids less than 10 per cent below the estimated cost, a rate of 0.1 per cent is applied for every 1 per cent deviation. If the bid exceeds a 20 per cent discount, the APS rate increases to 0.2 per cent per 1 per cent deviation, plus a flat 1 per cent, all calculated on the bid price. Additionally, the earlier cap of 3 per cent on APS has been removed, allowing the penalty to exceed this limit depending on the degree of underbidding. As per the ICRA, the APS is to be rounded to the nearest 0.5 per cent and is now treated as part of the overall performance security requirement. India has the second largest road network and its National Highways span a total length of 146,195 kilometres (km), forming the primary arterial network of the country. As per the official data at the end of 2024, national highway network grown by 60 per cent; rising from 91,287 km in 2014 to 146,195 km while national high-speed corridors increase from 93 km in 2014 to 2,474 km.(ANI)
