[T.S.R:16454] HCC: Are Design Changes, Cost Over-runs Back Ended Graft Payments?

Sets up panel to study the additional expenses claimed for completion of the Bandra-Worli sea link.

Problems of Hindustan Construction Company (HCC) are far from over. The state government has refused to clear its additional claim of Rs 648-crore for completion of the Worli Bandra Sea link project. Instead, the Prithviraj Chavan government has appointed a high-level committee to look into the claim.

This comes days after the company's tiff with the ministry of environment and forests (MoEF's) over the stop-work notice to Lavasa Corporation, its arm engaged in developing a hill city project in Maharashtra,

A state government official told Business Standard, "The new chief minister has already indicated that he would not clear any file pertaining to developmental expenditure without close scrutiny. Thus, the decision was taken to appoint a technical committee which will study the claims made by HCC."

The company was responsible for the construction of the 5.6 km bridge connecting Worli and Bandra.

Initially, HCC had claimed Rs 852-crore for the 5.6 km bridge of which the state-run Maharashtra State Road Development Corporation (MSRDC) cleared Rs 800-crore. HCC submitted an additional claim of Rs 648-crore in July this year.

The cost of the project, which was originally estimated at Rs 400-crore in 1999, has risen substantially to Rs 1,650-crore on account of change in the design, alignment and and the time overrun. Fishermen and residents of Worli, mainly bureaucrats and police officials, were against the original design which led to series of public hearings and subsequently MSRDC changed the design.

HCC sources informed, "These claims were made due to extra expenditure incurred on idling of equipment, overhead expenses and temporary works. The same invoices were made from 2005-06 onwards through the running bills to MSRDC. The amount, however, remains unsettled even in running bills. In July, the consolidated claim of Rs 648 crore has been submitted."

HCC sources clarified that the project comprised five developmental packages comprising bridges at Mahim and Worli end, the connecting road at Bandra and improvement of roads. HCC was not involved in these projects as they were carried out by other contractors.

Meanwhile, Lavasa Corporation has already challenged the MoEF's stop-work order at the Lavasa hill city and accused Environment Minister Jairam Ramesh of malafide intent in serving the notice. The company also alleged that the aim was to stall its planned public offer

 

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Nothing in this article is, or should be construed as, investment advice.

 

 

 

 

 

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