Thiruvananthapuram: In a massive setback for the state, the National Highway Authority of India (NHAI) has decided to annul contracts issued to prepare Detailed Project Reports (DPR) for the construction of Thiruvananthapuram Outer Ring Road (Rs 7000 crores), Kollam-Sengottai (Rs 3500 crores), and Ernakulam Bypass (over Rs 1000 crores). 

The move came against the backdrop of the delay in exempting the GST of construction materials and the royalty of raw materials by the state. NHAI has notified the state that new contracts may be given once the state makes a decision regarding the same.

Three agencies outside Kerala were assigned to prepare the DPR three years ago. Even after the due date, the state still pays fees for their service. As the land acquisition for construction purposes is still in the preliminary stage, the agencies are unable to inspect the lands under public ownership.

Despite holding multiple meetings with the Chief Minister, NHAI authorities failed to make a breakthrough. The Finance Department of Kerala is said to be opposed to the GST exemption as it will lose Rs 211 crores on GST share and Rs 11 crores on royalty.

In July 2023, Minister of Road Transport and Highways of India, Nitin Gadkari, sent a letter to Chief Minister Pinarayi Vijayan, stating that the Centre had agreed to fully fund the project. However, the Centre do demand the state to exempt GST and royalties. As this requirement was accepted by the CM, the Center had decided to move forward with the plans.