The Ministry of Road Transport and Highways (MoRTH) has extended compensation mechanisms for higher bulk diesel and bitumen prices until December 31, 2026, providing continued cost relief to contractors executing eligible national highway projects.
The extension comes as elevated global oil prices continue to push up highway construction and maintenance costs. Bulk diesel prices have reportedly increased from around Rs 87.67 per litre before the onset of the West Asia conflict in March to Rs 153.57 per litre, while bitumen prices have risen from Rs 48,900 per tonne in early February to Rs 84,120 per tonne.
Under the extended mechanism, compensation for higher bitumen prices will cover eligible work executed between April 1 and December 31, 2026. The POL price-adjustment mechanism, covering bulk petroleum, oil and lubricants, including diesel, has also been extended through December 31.
The measures are restricted to projects where the bid due date was before April 1, 2026, and cover eligible projects under contractual arrangements including Engineering, Procurement and Construction (EPC), Hybrid Annuity Model (HAM) and performance-based maintenance contracts, subject to conditions specified by the ministry.
The relief is particularly significant for highway contractors as diesel is a major operating input for construction equipment and project-site machinery, while bitumen remains a key material for road construction.
MoRTH has retained the existing compensation mechanisms rather than introducing a new formula. The ministry has also shifted eligible compensation payments from a quarterly to a monthly cycle, helping contractors manage working-capital pressures amid higher input costs.