Adani Enterprises' bid for the Bengaluru tunnel road project has come in at 96% above the original benchmark set by the government, raising questions about cost escalation. The government, however, argues that the overall premium reduces to about 35-40% when assessed against updated project costs and prevailing market rates.
Bid Details and Government Response
The original benchmark for the project was set at an estimated cost of ₹12,800 crore, but Adani's bid is reportedly around ₹25,000 crore. This significant jump has sparked debate about the viability and justification of the higher cost. A government official stated, "The original benchmark was based on outdated cost estimates. When we factor in inflation, updated material costs, and current market rates, the premium is actually in the range of 35-40%."
The tunnel road project, aimed at easing traffic congestion in Bengaluru, involves the construction of a 18.5-km tunnel from Hebbal to Silk Board. The project is being executed under a public-private partnership model, with the concession period set at 30 years.
Project Background and Significance
Bengaluru, known for its severe traffic congestion, has been exploring tunnel road projects as a long-term solution. The proposed tunnel will run beneath the city's core, connecting major traffic corridors. The project is expected to reduce travel time between Hebbal and Silk Board from the current 90 minutes to just 20 minutes.
Adani Enterprises, a diversified conglomerate, has been expanding its infrastructure portfolio, including road projects. The company's bid for the Bengaluru tunnel road is part of its broader strategy to invest in urban infrastructure.
Cost Escalation Concerns
The 96% premium over the original benchmark has drawn criticism from opposition parties and some civic groups. They argue that such a high bid could lead to increased toll rates and burden on commuters. However, the government maintains that the updated project cost reflects realistic estimates and that toll rates will be regulated to ensure affordability.
According to project documents, the original benchmark of ₹12,800 crore was set in 2022, but due to delays and rising input costs, the revised estimate now stands at approximately ₹18,500 crore. Against this revised estimate, Adani's bid of ₹25,000 crore represents a 35% premium.
Next Steps
The bidding process is currently under evaluation by the Karnataka government's infrastructure department. A final decision on awarding the contract is expected within the next two months. The government has assured that transparency will be maintained throughout the process.
