With increase in private capex, Build-Operate-Transfer projects to grow from FY25: Report
Sep 30, 2024
New Delhi [India], September 30 : The private sector's share in capital expenditure is set to increase from financial year 25, highlighted a report by Antique Stock Broking company.
The report noted that with increase in private investments, government capex will moderate. For the last few years, government capex remained the key driver of infra development, especially in sectors like road infrastructure.
"In the road sector, government-led capex (which has driven HAM, EPC) could moderate but private capex (led by BOT) should increase FY25E onwards" said the report.
The report also adds that the road construction awards are set to increase in the coming year. The project awards were stalled because of the election code of conduct this year.
Now after the formation of new government the report says that the total length of road projects awarded will increase from 8,581 kilometres in FY24 to 10,000 kilometres in FY25, and further to 12,000 kilometres in FY26.
"The road sector which has seen awarding of 8,581 km in FY24, we expect this to rise to 10,000 km in FY25 and further to 12,000 km in FY26E" added the report.
The report specifically highlighted the road sector, where government-led capex has primarily focused on Hybrid Annuity Model (HAM) and Engineering, Procurement, and Construction (EPC) projects.
Now with the rise in the private sector investment, the Build-Operate-Transfer (BOT) projects, will see significant growth from FY25 onwards. This shift could signal a broader transition in how infrastructure projects are funded in the future.
A major government initiative driving capex in the road sector is the Bharatmala scheme, under which projects worth Rs 2.4 lakh crore are yet to be awarded.
In addition to roads, EPC contractors have been diversifying their portfolios to include sectors such as railways, solar energy, and water management. The annual opportunities in these sectors are estimated at Rs 1 lakh crore for railways, Rs 15000 crore for solar, and Rs 70k crore for water-related projects.
Overall, while government-led capex in the road sector is expected to moderate, the private sector is set to play a more prominent role in driving future infrastructure development.
