Irrigation Projects: TS Government Agrees to Price Adjustment

The state government has finally decided to continue with the existing contracting agencies to complete the 13 major and 12 medium irrigation projects by making ‘price adjustment’ as per the increased costs. Orders to this effect were issued by the irrigation department here on Thursday.

The government had initially thought of inviting fresh tenders for completion of the 25 projects, most of which had been started during 2004-09 by the then government of combined state but the fresh price adjustment would have cost the exchequer a whopping Rs 15,000 crore. Therefore, it decided to retain the existing contractors by giving additional amount as per the cost escalation and complete the projects by 2018-19. This will cost the exchequer around Rs 3,000 crore. There are 111 packages to be completed.

The Builders Association of India (BAI) highlighted the difficulties encountered by their members in completing the projects and urged the government to take steps for completion of the projects without further delay.
Later, the government constituted a committee of experts to examine the issues represented by BAI members and a cabinet sub-committee was constituted for the purpose. As per its recommendations, the government agreed to allow cost escalation for the existing contractors and complete the projects in a time-bound manner.

However, only cases of those agencies will be considered in which project authorities are satisfied that the lapses were not on the part of the agency and delay is due to reasons not attributable to the agency.

The issues such as LA/RR/forest clearances/railways/NHAI crossings that caused delays in the first place should have either been resolved or could be resolved in foreseeable future will also be considered.

The government felt it prudent and economical (financially and in terms of time) to consider the demands of BAI instead of terminating the agreements and calling for fresh bids at current SSRs.

Closing of agreements may also lead to litigation and indefinite financial liabilities to the government. In addition to steel, cement and POL, price adjustment will be admissible for labour and other material components also for the work done after April 2013.

Keeping in view the importance of AMRP-SLBC tunnel work, reimbursement of variation in foreign exchange shall also be considered in addition to price adjustment for labour and other materials.

Measures & Objectives

  • Govt to continue with existing contractors.
  • 13 major & 12 medium irrigation projects to be completed by 2018-19.
  • Works on 111 packages pending since 2005.
  • The 25 projects to provide irrigation for 49 lakh acres.
  • The burden would have been Rs 15,000 cr had the agreements been closed and fresh bids invited.

Source: The New Indian Express

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