Friday, July 12, 2024

417 Infrastructure Projects Face Rs 4.77 Lakh Crore Cost Overruns

In September of this year, a staggering 417 infrastructure projects, each requiring an investment of Rs 150 crore or more, grappled with cost overruns exceeding Rs 4.77 lakh crore, as per an official report. The Ministry of Statistics and Programme Implementation, overseeing infrastructure projects valued at Rs 150 crore and above, disclosed that out of 1,763 projects, 417 faced cost overruns, while 842 projects experienced delays.

The initial cost projection for implementing the 1,763 projects was Rs 24,86,402.70 crore. However, the anticipated completion cost is expected to reach Rs 29,64,345.13 crore, reflecting an overall cost overrun of Rs 4,77,942.43 crore, equivalent to 19.22% of the original cost, according to the ministry’s latest report for September 2023.

The expenditure incurred on these projects until September 2023 amounted to Rs 15,44,600.67 crore, representing 52.11% of the anticipated project cost. Nevertheless, the report indicated a decrease in the number of delayed projects to 617 when considering delays based on the latest schedule of completion.

Furthermore, the report highlighted that for 298 projects, neither the year of commissioning nor the tentative gestation period had been reported. Among the 842 delayed projects, 194 experienced delays of 1-12 months, 190 were delayed for 13-24 months, 323 faced delays of 25-60 months, and 123 projects were delayed for more than 60 months. The average time overrun for these 842 delayed projects was 36.94 months.

Reasons cited for time overruns by various project implementing agencies included delays in land acquisition, obtaining forest and environmental clearances, and a lack of infrastructure support and linkages. Other contributing factors encompassed delays in securing project financing, finalizing detailed engineering, changes in scope, delays in tendering, ordering and equipment supply, as well as law and order problems.

The report also pointed to state-wise lockdowns due to COVID-19 (imposed in 2020 and 2021) as a significant factor causing delays in project implementation. Additionally, it observed that project executing agencies were not reporting revised cost estimates and commissioning schedules for many projects, suggesting potential underreporting of time/cost overrun figures.

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