Utility Shifting in Highway Projects

Utility shifting in highway projects refers to the relocation of existing utility infrastructure, power lines, water mains, gas pipelines, telephone cables, optical fibre networks, and irrigation channels, out of the highway right of way (RoW) before or during construction. It is one of the most common causes of construction delays and cost overruns in Indian highway projects.

What is Utility Shifting in Highway Projects in government procurement?

Indian road corridors, particularly on upgraded national and state highways, are criss-crossed with decades of accumulated utility infrastructure belonging to dozens of different agencies: electricity distribution companies (DISCOMs), GAIL, Indian Oil, state water boards, BSNL, state telecom departments, and private telecom companies like Jio, Airtel, and BSNL. Before construction can begin on a road widening or new bypass, these utilities must be moved to locations outside the new road cross-section.

Each utility agency has its own rules, timelines, and funding mechanisms for shifting. Power lines require the distribution company to plan the rerouting, obtain clearances, and physically shift infrastructure, a process that can take 6-18 months for major transmission lines. Water mains require the municipal body or water board to design the rerouted pipeline, procure materials, and execute the shift. Optical fibre cables require coordination with as many as 8-10 different telecom operators in a single corridor.

The cost of utility shifting is typically borne by the highway agency (NHAI or state PWD), not by the utility owner and not by the contractor. NHAI prepares utility shifting estimates as part of the project cost and coordinates with utility agencies. However, the actual work is either done by the utility agency using their own staff (with payment from NHAI) or tendered separately by the utility agency.

Delays in utility shifting are among the most common causes of hindrance in Indian highway contracts. Because utility agencies are independent organisations with their own priorities and constraints, highway agencies cannot control their timelines. NHAI's standard EPC contracts exclude utility-shifted areas from the contractor's obligation until the utilities are cleared, effectively extending the appointment date milestone for those sections.

Why it matters for bidders

For highway EPC contractors, utility shifting delays directly affect the construction schedule and cash flow. The EPC contract protects the contractor by excluding utility-encumbered areas from the obligation to work until they are cleared. However, the contractor must manage their construction sequence around these restrictions, maintaining equipment productivity when significant portions of the alignment are blocked requires careful planning.

For HAM concessionaires, utility shifting delays push back the appointed date (the start of construction) or extend the construction period, delaying the start of annuity recovery. The concession agreement's provisions on utility delay are therefore critical, a well-drafted concession should entitle the concessionaire to time extensions and, for extended delays, compensation for financing costs incurred during the waiting period.

Companies providing utility shifting services, rerouting overhead lines, laying replacement underground cables, shifting water mains, find the highway sector a substantial market. Procurement for utility shifting work is done by the respective utility agency (DISCOM, water board) under their own procurement rules, not through NHAI's systems.

Example

A contractor wins an NHAI EPC contract for 4-laning of a 55-km national highway section in Haryana. The DPR identifies 12 km of the alignment with a 33kV overhead power line running along the road shoulder that must be shifted before earthwork can begin. NHAI has already initiated the utility shifting process with the DISCOM before awarding the EPC contract. By the appointed date, only 6 km of the 12 km has been shifted. The contractor records this as a hindrance for the remaining 6 km. The EPC contract's hindrance provision kicks in, NHAI grants an extension of time for those sections proportional to the utility shifting delay. The contractor focuses work on the 43 km of clear alignment, returning to the hindered sections once the DISCOM completes shifting 4 months later.

Key rules / thresholds

NHAI's standard EPC contract (MCA) lists utility shifting as the employer's (NHAI's) responsibility before the appointed date. If utilities are not shifted before construction begins, the contractor is entitled to a time extension equal to the delay caused. For HAM projects, the Model Concession Agreement specifies that the concessionaire is entitled to a delay period extension (and associated annuity period extension) for utilities not cleared by the appointed date. NHAI maintains a utility shifting compensation register for each project section.