Despite missing six deadlines which caused massive escalation in costs, the New Delhi Municipal Council (NDMC) has not imposed any penalty on the contractors engaged for its ambitious Connaught Place restoration project.
Work started on the project immediately after a final approval by the Delhi Urban Art Commission in November 2008. It had to be completed by October 2010. But six deadlines have been missed since, the latest on June 30. If NDMC would have invoked the penalty clause in the work agreement, the civic body could have pocketed R40 crore but it hasn't done so.
The 'compensation for delay' clause in the contract by the project management consultant (PMC) states that penalty can be levied at 1% per week up to a maximum limit of 10% of the contract value. This information was revealed by the NDMC in a reply to a Right to Information (RTI) query by activist Ajay Kumar Goel.
The NDMC has hired Engineers India Limited (EIL) as the PMC, which outsourced the job after breaking it into 13 components (valued at a total cost of R44.68 crore). The RTI documents also mentioned that EIL had terminated one contract, worth R15.63 crore, and foreclosed three contracts, together valued at almost twice the cost.
What this means is that R40.46 crore is the maximum penalty that EIL can levy on errant contractors for the delay. "The contractors possibly included the 10% additional cost in the tender amount and hence enjoy the extended time without worrying about delays," Goel alleged.
According to NDMC chief engineer Anant Kumar, the authorities needed to first cross check the reasons for the delay before levying penalty. "Our priority right now is to complete the work. Payment and penalties can be taken care of later; we have the contractors' security deposits," he said.
Explained another official, "The EIL has withheld sufficient amount so that penalty, if applicable, can be recovered from the contractors."
He also said that EIL is working "on behalf of the NDMC, and in a way, it is the attorney holder for the civic body" and hence the NDMC cannot penalise it.