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TPC Estimate Couldn't Vary More Than 20-25% Worked Out by Govt: Financial Institutions Tightening their Norms on Highway Projects

News:

Bank representatives said they will be more vigilant and won't accept the project costs, which are more than 20-25% of our estimates. They said there is scope for little escalation since they feel our costing is slightly conservative and developers need to spend more.

Source: ET

SNP Insights:

The decision by finanical institutions not to accept the total project cost if it goes beyond 20-25% seems welcoming but sometimes this can act as a hurdle for some high risky highway projects where  government estimates might be so conservative. Now a days many projects have  a huge gap between the total project cost estimates by the government and the developer. Finding out the actual reasons behind this gap and incorporating the required remedies which creates a win win situation for the government and the developers may help the effective implementation of 20-25% limit of total project cost.

Source: SNP Infra Research