Chinese contractor STEC bags ₹1,126-cr RRTS contract

The Chinese firm – Shanghai Tunnel Engineering Company Ltd (STEC) – has bagged a ₹1,126-crore civil contract from Regional Rapid Transit System (RRTS). The contract meets the Finance Ministry procurement norms, and will have as much local and imported content as any other firm, according to RRTS officials.

Delhi-Ghaziabad-Meerut RRTS corridor – awarding the contract to STEC for a 5.6 km underground section between New Ashok Nagar and Sahibabad – is in spotlight as the contractor is from China.

Special machines needed

To build the tunnel (with 6.5 m diameter) in this underground section, special tunnel boring machines (TBMs) will be required, which have to be imported. “Any company getting this contract will have to import four TBMs costing ₹200 crore as TBMs required for RRTS tunnel are not manufactured in India,” said an official.

Moreover, the firm – STEC – will still have to rely on local manpower; other components such as cement, steel, aggregate, sand and other materials will be procured from India. “So, the local content used by any contractor would be in similar range, irrespective of the nationality of the firm,” said the official.

Construction firm STEC has successfully completed projects in India, including Delhi Metro and line 3 of Mumbai Metro Rail Corporation Limited (MMRCL).

From the 82 km stretch, around 76.4 km (93 per cent) of the civil construction contract is with Indian companies, while just 5.6 km (seven per cent) has gone to a foreign firm. In value terms, the total contract civil of ₹7,699 crore has been largely (84 per cent) bagged by Indian contractors such as L&T (₹2,520 crore), KEC (₹858 crore), APCO (₹605 crore) and AFCONS (₹2,590 crore).

Lowest bidder

As per industry sources, for the 5.6 km underground section, STEC was the lowest bidder at ₹1,126.89 crore, followed by Larsen & Toubro (₹1,170.00 crore), Gülermak Agir Sanayi Insaat ve Taahhut AS (Gulermak), which offered to make the underground tunnel for ₹1,325.92 crore, Tata Projects – SK E&C JV – for ₹1,346.29 crore, and Afcons Infrastructure (₹1400.40 crore). As is the case with large infrastructure projects, this project is being implemented with the norms of a major funding agency.

According to RRTS sources: “Since 60 per cent of the total cost of the Delhi-Ghaziabad-Meerut RRTS corridor (₹30,274 crore) is being funded by Asian Development Bank ($1,049 million), Asian Infrastructure Investment Bank ($500 million) and New Development Bank ($500 million), all contracts and procurements under the loan has to be done as per the funding agencies’ rule.

“Also, this special case clause is permitted as per the Department of Expenditure, Finance Ministry, order of July 23.”