Highway developers urge NHAI to treat West Asia crisis as force majeure for road projects 

Highway developers in India have sought policy level intervention from the National Highways Authority of India (NHAI), urging it to classify the ongoing West Asia conflict as a force majeure event for road projects, citing rising costs, supply disruptions, and execution delays.

In a representation to the authority, developers argued that while the conflict is geographically external to India, its cascading impact on global energy markets and maritime logistics is materially affecting highway construction across the country.  

The sector, which is heavily dependent on petroleum-linked inputs such as bitumen, diesel and lubricants, is witnessing significant cost pressures due to volatile crude oil prices. At the same time, disruptions in key shipping routes, particularly in the Red Sea region, have led to delays in the procurement of equipment and materials, alongside a spike in freight and insurance costs.

“These developments are beyond the control of contractors and are impacting project timelines and financial viability,” the representation noted, making a case for invoking force majeure provisions embedded in existing contracts.

Under current frameworks including Hybrid Annuity Model (HAM), Build-Operate-Transfer (BOT) and Engineering, Procurement and Construction (EPC) contracts—events such as war, conflict and embargoes are recognised as force majeure, allowing for contractual relief.

Developers have now asked NHAI to issue a sector-wide policy clarification or advisory, acknowledging the present situation and enabling uniform relief across projects.

 

Among the key measures sought are:

   •     Extension of time (EoT) for project milestones and completion deadlines

   •     Waiver of penalties or liquidated damages for delays linked to the disruption

   •     Compensation or adjustment mechanisms to account for sharp cost escalation in fuel and bitumen

   •     Standardised applicability across project formats, including EPC, HAM, BOT and TOT

 

Industry players have also pointed to precedents such as the COVID-19 pandemic and disruptions arising from the Russia-Ukraine conflict, during which similar policy-level relief measures were extended to ensure continuity of infrastructure execution.

They argue that a clear and uniform directive from NHAI would help avoid project-level disputes and support smoother implementation at a time when India is pushing ahead with an ambitious national highways expansion programme.