Seek compensation for escalated labour, sand, metal cost
Work on the Government’s flagship Jalayagnam projects may grind to a halt after January 10 as the contractors threw up their hands to continue the work without compensation for the escalated cost of construction material.
It would mean that if the escalated cost of about Rs.3,500 crore was not released to about 200 agencies, then Rs.70,000 crore that had been spent so far on the incomplete irrigation projects would give no tangible benefit of creating new ayacut any sooner.
Pleading their case, the Builders Association of India in its representation to the Irrigation Minister has said that the timelines of the projects taken up during 2004-05 had gone beyond the agreed period of 18 months to 30 months. It was mostly due to delay in land acquisition, relief and rehabilitation and payment of bills. Precious time was lost as government did not have a proper focus or plan in the early years, it rued.
While the escalation in project cost was limited only to steel, cement and fuel, the contractors had to bear the burden due to steep rise in the cost of labour, sand, metal, blasting material, oil etc., in the last seven years. “We had been appealing for the last two years to cover these components also under the price escalation as in other States. Agencies facing negative cash flow are in no position to continue work,” association chairman P. Mohan Reddy told The Hindu .
The EPC contracts awarded under Jalayagnam provided for the escalation in cost of only steel, cement and fuel cost. But they would comprise about 35 per cent of total project cost while other components accounted for the rest, he said.
For instance the labour cost increased from Rs.100 to Rs.125 per head to Rs.300 to Rs.400 and sand from Rs.100 per cu.m to Rs.1,000 per cu.m in the last seven years, Mr. Reddy said.
A workshop was held in March, 2011 to explain the issues and the Board of Chief Engineers in principle agreed for the demand, referred it to the Law department which also cleared it. A cabinet sub-committee was constituted to make its recommendations. “But nothing came out of it,” he added.