The Hindu Business Line : NHAI asked to build in adequate escalation clause in future projects

New Delhi, June 13 Stung by the recent upward movement in input prices of road construction commodities and the lack of adequate escalation clause in the NHAI contracts to absorb them, the National Highways Builders Federation (NHBF), a lobby body of developers implementing national highways projects has written to National Highways Authority of India (NHAI) requesting it to take care of this issue in future contracts for upcoming projects.

NHAI currently reimburses escalation of input prices based on wholesale price index on cement, steel, bitumen and oil published by the Economic Advisor, Union Ministry of Commerce and Industry.

However, these indices fail to provide the required reimbursement of actual price increase of key inputs, the association said in its representation to NHAI.

The lobby body has instead called for taking into account the prices as determined by SAIL, Cement Manufacturers Association (CMA), and Indian Oil Corporation for steel, cement, bitumen and fuel be used both at the time of tender and during execution.

“To ensure that contractors do not engage in speculative pricing and take on unmanageable risks leading to lack of progress at site, severe cash flow problems affecting the contractor’s ability to pay subcontractors and workmen, the reimbursement of cost increase for key inputs be based on difference in their prices prevailing 28 days before submission of bid to actual increase/decrease based on actual consumption of these key inputs,” the association has suggested for projects to be taken up as cash contracts.

BOT deals

For build, operate and transfer (BOT) contracts, in which the developer is allowed to widen the roads and collect toll for a certain pre-determined period, the association has said that after using the actual cost increase, NHAI should either increase the period for which the developer can collect toll or payout the grant.

Many of public agencies implementing projects including the railways, airports, and State Government agencies have already implemented some of these suggestions.

More Stories on : Roadways

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Govt gives in-principle nod for 4 airports in Karnataka

Taj SATS looking at newer revenue streams

GMR airport gets extension of VAT relief

4 new services calling at JNPT’s box terminal

Goodearth Maritime plans IPO by year-end

Quick N Safe plans hubs in northern, southern regions

NHAI asked to build in adequate escalation clause in future projects