The turnkey mode should be preferred to avoid cost overruns and time overruns and reduce the gestation period in project execution, according to A.P. Chowdhary, Chairman and Managing Director of the Rashtriya Ispat Nigam Ltd (the Visakhapatnam Steel Plant).

He was delivering the key-note address at the inaugural session of the one-day seminar on emerging trends in construction industry organised here on Thursday by the Visakhapatnam chapter of the Confederation of Indian Industry. He said the contractor would have to bear the operational risk in turnkey projects and it was essential for timely project execution.

Admitting that there was some delay in the execution of the expansion project of the RINL from 3 million tonnes to 6.3 million tonnes, he said it was the general trend in the steel sector in the country. “We should take all steps to avoid time and cost overruns. Long gestation period reduces the benefits of expansion,” he said.

He said the present capacity of RINL after expansion was 7 million tonnes or so and in the next phase five mt more would be added. Visakhapatnam and the neighbourhood would be enormously benefited with each expansion of the steel plant's capacity, as at least 30 per cent of the cost would be spent in the vicinity. It would generate a lot of economic activity.

T.K. Chand, Director (Commercial) of RINL and Chairman of the Vizag zone of the CII, said India would have to learn a lot from China in project execution. “The difference between China and India is that in India we calculate project time in terms of years and the Chinese do it in terms of days. Even if the project is delayed by a few days, the Chinese are terribly upset. Even years make no difference to us,” he said in a lighter vein.

Construction activity

He said the construction activity in Andhra Pradesh in recent times had suffered a bit due to scarcity of sand and other problems and therefore the offtake of the steel plant’s products such as rebars had also gone down. “The Andhra Pradesh Government has taken remedial steps and we hope we will able to sell more in the State, as there will be a revival,” he said.

G. Srinivasa Rao, AP Minister for Investment, Ports and Infrastructure, promised the delegates that the State Government would do everything possible to create a conducive climate for attracting investments into the State and the construction activity would also witness a boom.

“In particular, a major project is coming up between Visakhapatnam and Kakinada in the form of Petroleum, Chemicals, Petro-chemicals Investment Region and it will trigger construction boom in the coastal region,” he said.

G. Sambasiva Rao, Vice-Chairman of the Vizag zone of the CII, proposed a vote of thanks.

(This article was published on December 6, 2012)
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