The extension will cover projects executed under the engineering, procurement and construction (EPC) model, hybrid annuity model (HAM) and performance-based maintenance contracts (PBMC).
In its notification, the ministry said the extension was necessary because bitumen prices remained elevated. The mechanism is intended to mitigate the impact of rising input costs on highway construction and maintenance and support the uninterrupted execution of projects.
The compensation will apply to eligible work carried out between April 1 and December 31, 2026, under projects whose bid due dates were before April 1, 2026. The extension builds on the relief measures introduced by the ministry in April 2026 to address the significant increase in bitumen prices.
Under the mechanism, additional payments for bitumen used in bituminous works are calculated monthly based on actual consumption, limited to the approved job mix formula, and the difference between the applicable base-date price and the average monthly price at the nearest public sector undertaking refinery.
Price adjustments for other construction inputs will continue to be calculated under the relevant contract or concession agreement, with provisions to prevent duplication of compensation for bitumen costs.
The ministry has also cited the continuing difference between retail and bulk diesel prices as a reason for extending the petroleum, oil and lubricants (POL) price adjustment mechanism. The measures are intended to help contractors manage cost increases and maintain progress on National Highway construction and maintenance projects.
