The Telegraph
Friday , June 20 , 2014
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Cost axe hangs on flyover contract

The state government may cancel the contract of the company building the Vivekananda Road flyover as it has expressed its inability to complete work without an increase in the project cost.

The construction of the 2.2km flyover, to extend between Girish Park and a point near Howrah bridge, started in February 2009.

“There is little option other than cancelling the contract of the company, IVRCL. The company has told us that it does not have the money to buy steel for the remaining work. We cannot allow any hike in the project cost,” urban development minister Firhad Hakim said on Thursday. “We have sought the law department’s opinion on the implications of cancelling the contract and how we should go about it.”

IVRCL was given an 18-month deadline to execute the Rs 164crore project. Five years later, only 69 per cent of the work has been done.

The Hyderabad-headquartered company had a few months back written to the Calcutta Metropolitan Development Authority (CMDA), the implementing agency of the project, expressing its difficulty to do the remaining work without raising the cost.

The firm — it used the term “compensation”, instead of cost escalation, in the letter — admitted that it did not have the money to buy construction materials.

The company is currently undergoing a debt-restructuring programme. “Many of our clients defaulted in payment. Besides, the overall economic situation hurt our company. At present, we are in poor financial health,” an IVRCL official had told Metro in April.

The official had said that the firm needed to buy about 2,500 tonne of high-tension steel for the remaining work.

A CMDA official said cancelling the contract would further delay the project.

“Any new bidder will demand money according to the current market rates and that will mean a hike from the original project cost. The state government has to shell out more money than the 2009 project cost,” he added.