Facing road construction quality issues, Centre takes away state PWD and state department's powers for bidding out NHs

Mint

17-06-2025

The Centre has withdrawn the powers of state PWDs (public works departments) and road construction departments (RCDs) to independently issue bid documents for national highway projects in their states, according to a directive by the ministry of road transport and highways (MoRTH).
Instead, they will now consult MoRTH's regional officers (ROs), who will evaluate all state-issued bids, recommend necessary changes, and actively participate in resolving legal and arbitration disputes related to national highway works, the directive said, a copy of which was seen by Mint.
The new process will be applicable to all highway projects, including those costing less than ₹100 crore but excluding maintenance works.
Further, ROs would need to be consulted at every step in the case of contractual disputes and arbitration. MoRTH is preparing a separate, detailed standard operating procedure (SoP) for dealing with arbitration matters that will soon be issued.
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Queries emailed to MoRTH remained unanswered.
The National Highways Authority of India (NHAI) is responsible for highway construction across the country. However, it often works with state-level agencies for bidding, processing, and building specific highway sections within their states, along with other agencies like NHIDCL and MoRTH's construction wing,
The ministry's directive pointed out that 'in several projects pertaining to NH works implemented by State PWDs/RCDs, critical lapses have occurred due to lack of due diligence". That has led to disputes, legal complexities and financial liabilities for the central government, the directive noted, adding that ROs are not consulted or involved during bidding or in the courts, and the disputes are dealt with mechanically without safeguarding the interests of the Centre.
The directive has been sent by the MoRTH to secretaries and chief engineers of all states and Union territory PWDs, RCDs and departments dealing with national highways.
According to Jagannarayan Padmanabhan, senior director & global head at Crisil Intelligence, scrutinising all proposals from all state governments has its merits and demerits. 'The merits of such an exercise could mean avoidance of construction of parallel and competing roads, having a uniform bid awarding process across the country, and standardization of processes and bid documents, among other things," Padmanabhan said, adding that on the flip side, an additional layer of scrutiny and capacity augmentation at the central level would be needed.
Suprio Banerjee, vice president and co-group head at rating agency Icra Ltd said that these measures are likely to increase the award timelines, but project execution is not likely to be hampered while adhering to the norms or standards stipulated by the road ministry.
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'Also, the involvement of ROs in all legal contractual processes is expected to streamline the disputes adjudication process while avoiding the need for repetition," Banerjee said. 'Land acquisition being a state subject, the coordination between central and state government departments remains crucial to expedite the ROW and other associated approvals."
However, Shailesh Agarwal, partner for risk consulting (infrastructure) at EY India sounded a cautionary note when he said that uniform documents don't necessarily mean smoother highways. 'Ultimately, true quality improvement depends on regular quality controls, digitalisation, and accountability at the ground level," he said. 'Due care must be taken to ensure that the new system doesn't become a fresh bottleneck."
The disputes process
With regard to contractual disputes and arbitration, it has been decided that state PWDs/RCDs would not pursue such matters independently without consultation with ROs.
All replies, statements of defence, and written submissions intended for courts / arbitrations shall be vetted by the ROs and returned after scrutiny with comments or amendments before submission within a period of 15 days failing which the replies, statements or submissions may be deemed cleared.
The ROs would also be free to engage legal experts from NHAl-empanelled law firms for advice and support.
The highway building plan
In FY26, MoRTH proposes to construct about 10,000 km of highways, per the outcome budget 2025-26. As highway construction in the country matures, the liberal growth in construction is expected to slow and the focus will shift towards highway maintenance and enduring quality of construction.
Out of 146,195 km length of national highways (NH) network in the country, damages have been reported in about 1% of the stretch every year, according to data from MoRTH. The conditions of NHs are assessed from time to time by the MoRTH and its various executing agencies.
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The maintenance works on NHs are accordingly taken up from time to time to keep the NHs in traffic-worthy condition. According to MoRTH, the ministry spent nearly ₹6,500 crore on highway repair and maintenance in FY24. A similar level of expenditure is also expected to be incurred in the current fiscal.