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Resume KSTP work, Malaysian firm told

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Finance Minister: The Government is not responsible for road project delay.
Finance Minister: The Government is not responsible for road project delay.

Special Correspondent

THIRUVANANTHAPURAM: The Government has warned the Malaysian company that has been executing major stretches of the World Bank-aided Kerala State Transport Project (KSTP) to resume work unconditionally or get ready for renegotiation on Government terms. It has also decided to take a look at the entire project to identify how there was slippage in work execution and who were responsible for it.

Finance Minister T.M. Thomas Isaac told a news conference here on Wednesday that there was no basis for the charge that the delay in the completion of the project, which had assumed a sensational dimension following suicide by the local manager of the contracting firm, was on account of the Government's failure in acquiring land in time and releasing payments promptly. The Government had so far spent Rs.817 crore on the project, which has a total estimated cost of Rs.1,600 crore, but which would require at least Rs.3,000 crore for completion.

Although there was some delay in land acquisition initially, the Government had made up for it by putting land acquisition on the fast track. Currently the land needed for the entire project, save that at some junctions and some Government land, had already been handed over to the company. The real problem lay in the poor finances of the Malaysian firm, Pathy, which had bid for the work in association with the Bhageeratha group. A World Bank review team had stated that the slow progress could be attributed to low cash flow mobilisation by the contractor.

The Bank had also made it clear that if the situation did not improve in three months, it would carry out a unilateral inspection of the firm's bank account. Earlier, the consultants appointed by the World Bank and the State Finance Department too had come to the same conclusion, Dr. Isaac said adding he was fully with the Finance Department and the Principal Secretary (Finance) in all matters relating to the road project.

He said a study of the relevant documents would show that there were serious flaws in the tendering process and one could not help suspect that the contractors had bid for the project work as a cartel. This had resulted in the Government being forced to accept bids that would result in excess payment to the tune of Rs.788 crore.

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