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Thursday, January 20, 2022

Gujarat: Contractors cite cost escalation, threaten to stall govt projects, including PMAY

The GCA, he said, has already made a representation to the Gujarat government with regard to the price escalation in projects of the roads and building department, urban development department, irrigation department, and police housing on December 7, but the government has so far remained silent.

By: Express News Service | Ahmedabad |
January 4, 2022 2:24:16 am
BMC has taken a NOC from Maharashtra Maritime Board and work will cost Rs 86 lakh.

Faced with escalation in prices of raw material during the Covid-19 pandemic, the Gujarat Contractors Association (GCA) has threatened to stall work of various government-funded projects that includes 1.5 lakh housing units being built under the Pradhan Mantri Aawas Yojana (PMAY) ahead of the Vibrant Gujarat summit.

Interacting with media persons on Monday, association president Arvind Patel said, “We will not be able to finish the ongoing state government projects at old rates. The raw material costs have gone up by 30 to 40 per cent during the Covid-19 pandemic. This includes prices of steel, cement, bitumen, gravel, sand, bricks, transportation and labour charges. The financial condition of contractors has become so grave that they are forced to shut down projects, which includes PMAY projects worth Rs 15,000 crore.”

The GCA, he said, has already made a representation to the Gujarat government with regard to the price escalation in projects of the roads and building department, urban development department, irrigation department, and police housing on December 7, but the government has so far remained silent.

“Due to Covid, work had stopped on government projects and deadlines were extended. The government did so without compensating us for the increase in prices… In central government contracts, price escalation clause is in-built. That is not so in the case of state government projects, especially those that have a 12-month duration or less. For those projects having the price escalation clause, the upper limit is five per cent,” said Kishore Viramgama, vice-president of the association.

According to GCA, in addition to the PMAY projects worth Rs 15,000 crore that are under way in Gujarat, there are ongoing projects worth Rs 25,000 crore of other departments.

“We are aware that the government can forfeit our deposits and blacklist us. But the price escalation is so much that we cannot carry on. The losses that we are facing is much more than the deposit money with the state government. How can the contractor put his own money in finishing the projects,” Viramgama added.

On Monday, members of the association met and decided not to participate in tenders floated by the state government from January 8.

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