HCC rejects new Bandra sealink project arbitrator

The appointment of Dar Constructions as arbitrator by the Maharashtra government to resolve the cost escalation issue that has grounded the ambitious Bandra-Worli sea link project has not been accepted by Hindustan Construction Company (HCC) which is executing the project.

According to a state government official, the term of the previous arbitrator ended recently after which the state appointed Dar Constructions to continue the arbitration process.

HCC had on March 20, written to the state government seeking a total Rs 694 crore for the eight lane sea link project.

In a written reply to the state legislature, Vikramsinh Patankar, minister for public enterprises, said on Monday, "The original project cost was pegged at Rs 400.23 crore over which Rs 294 crore is now being sought. The contractor (HCC) has sought this cost escalation owing to increased price of raw materials, changes in the project design, work schedule delays, changes in original plan and increased term of project completion. The refusal by the contractor to the cost escalation (pegged at Rs 120 crore by the state government) has resulted in work on the project being slowed down."

The state government had appointed a high power committee under former chief secretary Ajit Nimbalkar to resolve the issue of cost escalation sought by HCC so that the project work, that has been shut down since October 2003 (a mere nine months after the project started upon receiving the requisite environmental clearances) could be completed soon.

HCC had been seeking Rs 294 crore more for the project, citing cost escalations as well as the 1.5 km of the sea link strip that has been additionally included into the original project.

The state government on its part conducted two separate appraisal to find out the practicable cost escalation and arrived at the figure of Rs 120 crore.

The Maharashtra State Road Development Corporation (MSRDC) and the Public Works Department (PWD) of the state government, relying upon the bills submitted to MSRDC todate by HCC for the completed segments of the project, concluded that the rational cost escalation should not exceed Rs 120 crore.

When this cost escalation amount was found unacceptable by HCC, the arbitration was commenced since March.