MoRTH embarks upon taking concrete steps to strengthen contractors’ payment system

Ministry of Road Transport and Highways has undertaken settling of contractors’ issues, including dues, through arbitration in big way to not only ensure ease of doing business but also to boost stakeholder confidence in building quality road infrastructure in country. Conciliation Committees have been formed consisting of Independent Experts (CCIEs) for this purpose. All contractors are being called for conciliations for expeditious settlement of their claims and get their payments released immediately. 47 cases involving claims of Rs. 14,248 Crore have been settled during this year. Discussions are underway on another 59 cases.

The annual Annuity obligations for NHAI are approx. Rs 5000 crore. All Annuities payments are made in time. In HAM projects, NHAI provides 40 per cent of the Bid Project Cost as Construction Support based on achievement of Milestone. Whenever the milestones are achieved, payments are made quickly. The Grant /VGF towards BOT (Toll) Projects are paid as per the terms of the Concession Agreement and depends on many factors including physical progress, equity and debt infusion. There are no overdue payments pending with NHAI. Various systems have been introduced for immediate payment of dues. Special efforts were made and over Rs ten thousand crore were disbursed towards various payments in the first nine days of nationwide lockdown.

The payment structure has been further simplified under the Atm-Nirbhar Bharat scheme, and contractors’ payments are being made every month instead of Milestone achievement basis. This has proved extremely beneficial towards timely completion of National Highway projects in the country.

The Ministry has also extended a number of relief packages for its contractors and concessionaires owing to COVID-19 scenario. Retention money (which is a part of the Performance Security till construction period) is being released in proportion to the work already executed in accordance with the Contract specification, and retention money for upto six months’ period is not deducted from the Bills raised by the Contractor. For HAM/ BOT Contracts, Performance Guarantee is released on pro-rata basis. Out of total 1253 applications under 1155 projects for this relief, Rs 3527 crore has been released, while over Rs 189 crore is under process.

Extension of Time is being given to Contractor/ Concessionaire for meeting their obligation under the Contract for upto six months depending on site conditions. Out of total 207 applications under 196 projects for this relief, Rs 34 crore has been released, while Rs 15 crore is under process.

Relaxation is given in Schedule H to provide monthly payment to the Contractor for the work done and accepted as per the specification of the contract during the month EPC/HAM Contract. Out of total 863 applications under 774 projects for this relief, Rs 6526 crore has been released, while over Rs 2241 crore is under process.

Direct payment is made to approved Sub-Contractor through Escrow Account. Out of total 21 applications under 19 projects for this relief, Rs 241 crore has been released, while over Rs 27 crore is under process.

Waiver of penalty for delay in submission of Performance Security/ Bank Guarantee in new Contract entered into during March, 2020 to September, 2020. Out of total 17 applications under equal number of projects for this relief, Rs nine crore has been released.

Extension of Time is allowed to Consultants i.e, I.E/A.E for 3 to 6 months depending on site condition. During this Force Majeure Event, they may be considered as if they were on duty. Out of total 31 applications under equal number of projects for this relief, Rs two crore has been released, while Rs one crore is under process.

BOT/ TOT Concessionaire: Before CoD, the concession period of BOT contracts is being extended by a period equal in length to the duration of 3 to 6 months.  Further, for loss in collection of user fee, the concession period is extended by a period in accordance with the Contract till the time daily collection is below 90% of the average daily fee. An application for this relief of Rs two crore is under process.

For all National Highway Tolling Contracts, loss in collection of fee (remittances) is compensated in accordance with the Contract. An application for this relief is under consideration.

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