Telangana government’s flagship infrastructure projects have become costlier due to rising input prices triggered by the ongoing US-Iran conflict, with contractors quoting significantly higher rates for school and road works under the Hybrid Annuity Model (HAM).
Official sources said the government has already finalised “excess tenders” — bids higher than the estimated project cost — for the construction of Young India Integrated Residential Schools (YIIRS). Proposals related to excess quotations for HAM road projects are expected to be discussed at the Cabinet meeting scheduled for May 21.
Contractors reportedly cited sharp increases in the prices of construction materials and other key inputs following the escalation of tensions in West Asia.
The Telangana Educational Welfare Infrastructure Development Corporation (TGEWIDC) had invited tenders for YIIRS projects with an estimated cost of ₹10,199.54 crore. However, the tenders were finalised at ₹10,693.55 crore, resulting in an additional burden of ₹494.01 crore on the state exchequer.
The government plans to establish YIIRS campuses in 105 Assembly constituencies. So far, approvals have been granted for 83 schools. Of the 78 schools sanctioned in the first three phases, tenders have been invited for 76, excluding Serilingampally and Chandrayangutta constituencies.
The Roads and Buildings department is also preparing a detailed report on HAM road projects for the Cabinet meeting. Chief Minister A. Revanth Reddy reportedly reviewed the report, which includes details of higher contractor quotations and pricing trends in other states.
Contractors submitted bids for HAM road projects that were up to 25 per cent higher than official estimates. However, the government’s comparative study found that excess quotations in some other states touched 30 per cent.
Under the first phase of the HAM programme, the government plans to construct 441 roads in 34 packages covering 6,092.37 km at an estimated cost of ₹13,006.27 crore. Financial bids revealed excess quotations ranging from 14.4 per cent to 23.5 per cent above estimates, with the average excess pegged at 18 per cent.
Following the surge in project costs, Roads and Buildings Minister Komatireddy Venkat Reddy directed officials to study HAM implementation policies in states including Maharashtra, Karnataka, Madhya Pradesh, Bihar, Gujarat and Tamil Nadu.
According to the report, additional costs included 11 per cent towards plant and machinery usage, 2 per cent for surveys and designs, 2.8 per cent for work management, 9.3 per cent towards GST-related interest payments, 4.46 per cent due to increased fuel expenditure, and nearly 30 per cent for independent engineering charges.
Despite officials concluding that Telangana’s excess quotations were relatively lower than those in other states, the government is expected to bear an additional burden of nearly ₹2,340 crore over the estimated ₹13,000 crore cost for the 34 HAM road packages.
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