A damning report by the Comptroller and Auditor General of India (CAG) has exposed serious mismanagement and "imprudent decisions" by the National Highways Authority of India (NHAI) in the four-laning project of the Ludhiana–Talwandi section of NH-5 in Punjab. The audit reveals that these decisions caused prolonged delays and a substantial cost overrun of ₹41.7 crore.
Project Timeline and Initial Breakdown
The NHAI entered into a concession agreement with a private player in January 2011 on a build-operate-transfer (toll) basis for 29 years. With an appointed date of March 26, 2012, the project was slated for completion by September 21, 2014. While the NHAI provided 100% right of way by June 2013, the concessionaire began demobilizing machinery by December 2013 and soon halted work citing financial constraints.
Despite issuing multiple cure period and show-cause notices between 2013 and 2016, and even a notice of intention to terminate the agreement in June 2016, the NHAI did not follow through with termination at that time. The project remained stalled for years.
Flawed Use of Financial Assistance Scheme
By November 2019, the project progress was at 91.9% with ₹453.8 crore already spent. The concessionaire then sought ₹13.5 crore under the One-Time Financial Assistance Scheme (OTFIS) to complete just enough work—75% of the project length—to begin toll collection. The NHAI approved and disbursed over ₹12.9 crore.
The CAG strongly criticized this move. The audit noted that while OTFIS was designed by the Cabinet Committee on Economic Affairs for completing languishing projects, it was applied differently here. In other projects, assistance was given for full completion, but in this case, NHAI sanctioned the bare minimum for provisional completion.
Internally, NHAI had assessed in August 2020 that toll revenue would be insufficient to finish the remaining work promptly, potentially causing a two-year delay and possibly requiring an additional ₹30 crore. This proposal was never approved.
Termination and Escalated Costs
Following the provisional completion certificate for 59 km (75% length) in September 2020, tolling began. However, due to continued financial stress, the concessionaire failed to complete the balance work and requested termination in July 2021. NHAI finally terminated the agreement in November 2021, when physical progress was at 93.2%.
The remaining works had to be re-awarded at a cost of ₹82.2 crore. The CAG concluded that NHAI's decision to provide minimal assistance solely to start toll collection resulted in nearly two years of further delay and a significant cost escalation. The auditor pinned the direct cost overrun at ₹41.7 crore on this imprudent approach.
NHAI and Ministry Response
In its reply in June 2024, the Ministry of Road Transport and highways stated that the OTFIS amount was approved to enable provisional completion and toll commencement, with the balance work to be funded by toll revenue. A subsequent reply in November 2024 confirmed the project's termination despite OTFIS support.
Critically, during an exit meeting on November 13, 2024, the NHAI accepted that the OTFIS scheme was not uniformly applied. The CAG stated that the ministry's replies substantiate the audit's finding that financial aid was granted merely to achieve provisional completion, not full project delivery, despite knowing the toll revenue would be inadequate.
