THE BMC is facing a long delay in its ambitious water supply tunnel project after awarding the multi-crore contract to a company undergoing a serious financial crisis. The municipality’s planned water supply tunnel project from Chembur to Parel through Wadala will solve the water supply grievances of people from Kurla to Parel, or a large chunk of central Mumbai.
But even over five months since the contract was awarded, there is uncertainty over whether the work will begin with the company having failed to pay the legal charges, bank guarantee and Earnest Money Deposit (EMD) to get the formal work order.
This tunnel, a key preparatory work to plan for Mumbai’s water supply needs for the next 20 years, was first proposed in 2011-12. In 2018, the contractor was finalised. Delayed by almost six years, the project now has a fresh deadline of 74 months (six years, two months) for completion. But five months since that fresh deadline was set, not even initial works have begun.
The tunnel will be constructed 100-110 m below the ground and will be a 9.7-km stretch from Chembur to Parel.
On July 4, the municipal Standing Committee cleared the proposal to award a contract of Rs 1,365 crore to infrastructure company Soma Enterprise Limited. The company is promoted by Pune-based builder Avinash Bhosale, who also holds the post of joint managing director at Soma.
Soma, incidentally, is currently executing one package of the Mumbai Metro 3 (Colaba-Bandra-Seepz) project in a joint venture with another company.
A source in the BMC said, “It has been over five months that the proposal was cleared and the project awarded, but Soma Enterprise Limited has failed to pay even legal charges (about Rs 2 crore to Rs 5 crore), the bank guarantee and EMD to the BMC, amounting to about Rs 60 crore. The company is going through a financial crisis for more than a year. Despite that the Standing Committee decided to award the contract to Soma.”
A couple of notices have been issued to the company, and it was given extensions to pay the charges. The last extended deadline was the last week of November.
Sources said the BMC was aware that the company was facing financial difficulties, but there was pressure from senior officials to award the company the contract. Normally, in such cases, after the lapse of an extended deadline, tenders are re-invited or the contract awarded to the second lowest bidder. The BMC has not initiated any such step yet. Earlier this year, Soma was under a debt of over Rs 3,600 crore. It restructured its debt to avoid insolvency.
Despite repeated emails and calls, representatives of Soma did not respond to queries regarding the financial difficulties and the delay in the project. Chief Engineer of the water special projects (WSP) department, Manmohan Pednekar, refused to comment on the delay.
But the delay is yet another one in a series of revisions for the tunnel project. The BMC had proposed two tunnels, Chembur-Wadala-Parel and Chembur-Trombay, to improve water supply in the eastern suburbs, central and parts of south Mumbai. The purpose of the tunnels is to replace dilapidated pipelines to eliminate theft and leakages.
Initially, the estimated cost of the Chembur-Wadala-Parel tunnel was about Rs 470 crore. In 2016, after a consultant was appointed to prepare an estimate, it was revised to Rs 604 crore. Later, it was again revised to Rs 767 crore owing to difficulties in tunnelling and other factors. Soma was the lowest bidder. The contract cost with taxes is now Rs 1,125 crore, and with supervision charges it will cost the BMC Rs 1,365 crore.
A senior official said, “We were not aware of the Soma’s financial condition when the contract was awarded. The company was awarded the contract as per procedures. For the delay in starting work, we will impose a penalty on a daily basis. The contractor has sought some time for paying the charges, but recently another extension has ended. We will discuss and take a final decision against the contractor.”