BMC and L&T move arbitration over ₹200 crore dispute on Coastal Road
The civic body has been trying to resolve this for a year, but despite this, it has not impacted the project’s work, claims the official. “We have tried resolving this at consultant level, then a committee was formed at deputy municipal commissioner level, and then a committee was formed by the commissioner comprising of three additional commissioners”
Mumbai: The Brihanmumbai Municipal Corporation’s (BMC) Coastal Road project department and the Larsen & Toubro (L&T) have moved arbitration over a cost escalation dispute of ₹200 crore in the construction of the Coastal Road project (South).
L&T has been demanding ₹100 crores more in each of the two packages - package 1 and 4, that it has been constructing, said the BMC officials.
The civic body has been trying to resolve this for a year, but despite this, it has not impacted the project’s work, claims the official. “We have tried resolving this at consultant level, then a committee was formed at deputy municipal commissioner level, and then a committee was formed by the commissioner comprising of three additional commissioners.” The official shared that in all of it, BMC’s price calculation is correct, however, the contractor did not agree and moved arbitration. “Hence, an arbitrator is appointed with mutual consent. We have presented our defence in the arbitration, and are awaiting the decision.”
Officials added that “the base index referred by L&T for cost escalation is the December 2017 index, whereas it should be calculated on the February 2018 index.” The officials said that the tender conditions mentioned that the base value should be calculated 28 days prior to the date of submission of the tender. “As per this, it should have been calculated basis the February 2018 index, but the company has calculated basis the December 2017 index, which has led to a dispute and cost difference of ₹200 crores.”
Both parties are likely to move court if a mutual resolution does not come out of the arbitration. HT, reached out to the chief engineer, Coastal Road (south), but he refused to comment on the matter.
Despite repeated requests, L&T officials refused to comment on the matter.
The BMC, which is executing the ambitious coastal road project had said that it is likely to be fully open by May 2024, seven months delayed from its original deadline.
Coastal Road is a project that starts from the Princess Street flyover and goes on till the Worli end of the Bandra-Worli sea link. It has 4.35 kilometers of road on reclamation, 2.19 kilometers on bridges, and 2.072 kilometers of each tunnel. The road on reclamation and bridges will have 4+4 lanes. Of these 4 lanes on each side, one lane will be reserved for the Bus Rapid Transit System (BRTS) / emergency vehicles. The tunnel has 3+3 lanes of which one lane will be for BRTS.