NHAI flashes red signal to yet another road project

The country8217;s premier road agency, the National Highways Authority of India8217;s NHAI, crucial port connectivity programme has run into rough weather...

The country8217;s premier road agency, the National Highways Authority of India8217;s NHAI, crucial port connectivity programme has run into rough weather with the body likely to terminate yet another contract for a project that connects Tamil Nadu8217;s Tuticorin port to a national highway. This makes it the third such contract to be cancelled in just three months, after a similar debacle involving road projects connecting Kochi and Haldia ports.

The 47-km long Tuticorin port road project, which was awarded to a joint venture between Ranchi-based public sector undertaking Mecon and GEA Energy Systems in February 2004, was expected to see completion in August 2006. Almost a year on, however, NHAI claims that little progress has been made on the ground.

8220;Onsite surveys indicate that the progress is very slow and so far only 22 per cent of the work has been done. There are also some quality concerns. We have decided to call off the contract with the joint venture and we expect to finalise this in a month or so,8221; said a senior NHAI official.

When contacted, officials of Mecon were tight-lipped about the issue, but maintained that the project had been delayed as NHAI had failed to acquire and hand over land for the road. While NHAI says it has been unable to deliver a 2 km stretch, Mecon claims that over 50 per cent of the land had not been handed over.

Mecon also maintains that NHAI had not proposed 8216;termination8217;, and had rather agreed to declare the project closed on an 8216;as on8217; basis. This means that contrary to a 8216;termination8217;, where the contractor has to forfeit 10 per cent of the project cost by way of a performance guarantee paid upfront to NHAI at the time of being awarded a contract, the joint venture would not have to undergo such a penalty.

Insiders say that NHAI is not keen to approach the courts for arbitration as it had also failed to deliver on the land promised for the project.

This is not the first time that a port-connectivity project involving Mecon has run into delays. In May this year, the contract for a 10-km Kochi port road awarded to Mecon was cancelled, owing to inordinate delays. While the project was slated to be completed in August last year, the status as on April 2007, indicated that only 45 per cent of the work had been finished.

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Unlike the Tuticorin project, where the company is not likely to incur significant penalty, in the Kochi case it had to forfeit the 10 per cent performance guarantee on the project cost of Rs 106 crore. NHAI also slapped additional monetary penalties on the company, since it had to compensate for extra expenses incurred while re-awarding the contract.

A similar fate dogged the 53-km Haldia port road, which after a two-year delay saw the contractor 8212; a joint venture between a Chinese and Indian company 8212; finally lose the project. What is adding up to a worrying trend, the New Mangalore and Paradip Port connectivity projects are also going down a similar road, with year long time over-runs expected.

In a larger perspective, this means indefinite delays in the total 390 km of roads envisaged for the connectivity of 11 major ports. So while these roads should have been nearing completion, only 158 km have been completed and the balance remain mired in expensive delays and inevitable inconveniences.