Developers Ask NHAI to Declare Force Majeure Over Crisis

• Developers seek force majeure for highway projects.
• War raises costs of fuel, bitumen, logistics.
• NHAI assures supply but risks remain high.

Highway developers in India have appealed to the National Highways Authority of India (NHAI) to consider the ongoing conflict in West Asia as a force majeure event. They have pointed out that the increasing costs and supply disruptions are major factors that are affecting the implementation of road construction projects.

Contractors associations as well as individual contractors have drawn attention to the fact that geopolitical tensions have resulted in the upsurge of prices of major inputs like bitumen, diesel, and other construction materials as well as logistical challenges. Besides, such disruptions are out of the control of developers and therefore there is a possibility that project timelines and financial viability may be affected.

Force majeure with regard to developers will mean that they may be granted relief measures such as the extension of concession periods, safeguarding against revenue losses, and compensating for cost escalation. In fact, classification as such would pave the way for contractors to tackle risks that are unforeseen and arise due to global events like war.

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The worries are based mainly on India's dependence on imports from West Asia for essential materials like bitumen, which is a major component in road construction. Any disruption in supply chains or shipping routes directly affects project execution and costs.

As a countermeasure, NHAI has given its word to developers that it is in talks with oil marketing companies to ensure an uninterrupted supply of fuel, bitumen, and other necessary inputs besides keeping a close eye on the situation. Nevertheless, contractors still keep their guard up as transportation expenses and input prices are the ones which keep going up, which may put pressure on both ongoing as well as future highway projects.

It is an issue that points to the way global geopolitical tensions are having a greater and greater impact on India's domestic infrastructure development. Should the conflict continue, developers warn that delays, cost overruns, and financial stress in highway projects could become even more pronounced, hence making policy intervention necessary.