Fund-starved AP govt opens purse strings for contractors

HYDERABAD: The state may be starved of funds, but that does not appear to come in the way of the TDP regime bestowing a Rs 1,000 crore payment to irrigation contractors towards what it calls cost escalation. The contractors have already been compensated to the tune of Rs 7,000 crore towards escalation of cost of steel, cement and sand. Now, they have sought an additional Rs 1,000 crore for what they termed as delay in the project due to changes in design and land acquisition.The irrigation department has put forth the proposal to relax the norms and the AP Cabinet is likely to clear it at its meeting in Rajahmundry on Wednesday.
Earlier this year, the Andhra Pradesh government had issued GO 22 allowing cost escalation for steel, cement, labour and sand procurement benefiting the contractors to the tune of Rs 7,000 crore. Not satisfied with the cost escalation of the material, several contractors are now bringing pressure on the state government to relax other norms that are coming in the way to claim higher rates.
For example, under the Engineering- Procurement-Construction (EPC) method, contractors have to bear with additional expenditure if any without making a claim on the same from the state. However, contractors have presented an argument that the delay in getting forest, environment and railway clearances by the state government agencies had resulted in the cost overrun. Based on this, they have demanded that the government make up for the additional burden on them as the job of getting clearances rest with the government. Based on this argument, they have asked the irrigation department to implement new Scheduled Standard Rates (SSR) in case of delay to the projects on the part of the government agencies.
“Implementing new SSR rates will benefit irrigation contractors heavily as none of them have started work in as many as 41 irrigation projects. Delay in getting forest, environment clearances by the government will give them a windfall,” observed a senior official in the government.
Contractors also demanded a higher price for clearing rock soil by categorizing the soil as soft, rocky, hard rock and abrasive rock. According to them, works involving abrasive rock should get double the amount as compared to regular rock. If this proposal is accepted, it will benefit the contractors of Galeru-Nagari Sujala Sravanti (GNSS) and Handri-Neeva Sujala Sravanti (HNSS) as they have made several requests on the categorization of the rock. However, the state-level standing committee (SLSC) headed by the chief secretary is still to come to a conclusion on the categorization of rocks in view of paucity of qualified geologists to determine the same.
The cabinet will examine the proposal to give powers to district committees of irrigation projects so that they can allow the cost escalation at the project level. If this is cleared, then the cost escalation issue will not come to the cabinet anymore and chief engineers of quality control and the project concerned can decide on the escalation aspect. Sources close to chief minister Chandrababu Naidu claimed that the decision to relax most of the norms has been already taken and that the approval of the cabinet is a mere formality.