The anti-corruption NGO has alleged that the inflated prices that seemingly advantage contractors at the cost of taxpayer money.

Chennai Corporation quoting blown up prices for road tenders alleges Arappor IyakkamWikimedia Commons/L Vivian Richard
news Corruption Tuesday, November 12, 2019 - 08:47

Chennai-based anti-corruption NGO Arappor Iyakkam has expressed serious concerns over tenders floated by the Bus Route Roads (BRR) Department of the Greater Chennai Corporation, and have alleged that they have been overpriced. The Department is tasked with maintaining and improving roads along bus routes in the city. Arappor Iyakkam has alleged that the price of raw materials to lay roads have been inflated above the market price, resulting in a loss of taxpayer money. The group alleges that the high rates for the Rs 300 crore bus route roads tenders under smart city schemes have been fixed as such to 'unjustly enrich select cartel of contractors'. Even as the tenders close on Monday, the NGO has sought that an amended tender be issued.

According to a representation submitted by Arappor Iyakkam to the Chennai Corporation, the standard rates of raw materials did not reflect market prices, nor did they reflect the Corporation’s own estimation from earlier. In particular, the prices of concrete components have reportedly been boosted. For example, the price for supplying and placing of ready-mix concrete per cubic metre has been fixed at Rs 7,873, exclusive of tax. However, only last year the Corporation's Buildings Department had quoted a market rate of Rs 6971.4 for the exact same component, inclusive of GST. In both cases, these charges take into account labour, among other costs. According to Jayaram Venkatesam, Convenor of Arappor Iyakkam, cross-checking with a corporation-approved plant revealed that the base price of the ready-mix had, in fact, come down by Rs 200 per cubic metre compared to the Corporation's rate in 2018.

“However, fixing it at Rs 7,873 excluding GST is to provide unjust enrichment to the contractor. All the rates have to be revised and a corrigendum must be issued immediately,” the letter says. The letter also alleges that the Corporation has been in the practice of floating the bus route roads tenders when the price of bitumen, a petroleum residue used for laying roads, is high. However, the actual laying of the road reportedly takes place when the price drops by between 25 and 30 percent.

Speaking to TNM Jayaram says, “They take the base rate. Then they will look at components (labour charges, etc). They will add all this to arrive at the standard or scheduled rate. Through RTI, I got the workout of the previous tender. This shows that the current tender has quoted an increase of more than Rs 2,000. They themselves are boosting it. Thus, the Corporation must have a variable pricing mechanism wherein it must be fixed with respect to the market rate and the payment to the contractor can be adjusted accordingly.” If not, the practice provides undue favour to contractors, he says.

Moreover, Arappor points out that last time around, the Corporation had promised not to raise the height of roads. However, the tenders did not contain a milling component which would maintain or lower the height.

The tender also requires that bidders must have done 50 percent value work experience in the last three years. However, over the last four years, Arappor alleges that only a select set of 20- 30 contractors have been allowed to participate. This, in effect, ensures that only they continue to be eligible to apply. "There is a huge concern that tenders are prefixed in the Corporation. Therefore, it is important that the package system in taken out and all tenders may be broken up worth less than Rs crores and Corporation allows significant competition, the group suggests.

The NGO has also sought that they payment of Earnest Money Deposit (EMD, a down payment by the contractor) be brought online to avoid Corporation's contact with engineers. Despite assurances, the Corporation is yet to implement this.

“This is not a very urgent tender. They cannot lay roads till January, after the monsoon. So there is no urgency to close the tender on Monday. I have asked them to issue an amendment with a decreased rate,” Jayaram says.

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