The Invisible Corruption

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Why invisible  ?

Because it is cleverly camouflaged in the ” Terms of Contract ” that companies sign with Central Government / State Governments / Municipal Corporations / umpteen Government Agencies

This invisible corruption is rampant in Infrastructure Projects that get spread over months / years

And every possible trick / excuse ( officially called ” Reasons ” ) is used to ensure that these Projects get delayed as much as possible !

Examine carefully and you will find that the more a Project  gets delayed , the more that Contractor stands to gain ! Anyone believing otherwise , has got to be naive  !

How  ?

These contracts contain ” Cost Escalation Clauses ” which decide the extra / additional amounts payable to the Contractor , over and above the ( so called ) ” Fixed Price ” quoted at the time of tendering

Under these clauses , the Contractor is eligible to claim / demand extra payments , whenever


– costs of certain ” Inputs ” go up above a certain agreed level , eg :

#  Prices of Raw Materials

#  Prices of Water / Gas / Electricity

#  Cost of Labor

#   Foreign Exchange Rate

#   Consumer Price Index

#   Interest Rate

If any of these go up above certain agreed levels , the quoted price to go up by X/Y/Z amount , as per the Formula which determines the % age contribution of these elements , in the quoted price


#  Environment Clearance for the Project

#  Land acquisition and Handover to Contractor

#  Hundreds of permissions from dozens of Govt Depts/Muni Corporations

#  Issue of Import Licenses

#  Release of Foreign Exchange

#  Issue of NOC from umpteen departments

#  Issue of Compliance Certificates from various departments

#  Approval of Designs / Design Change Requests ( from Govt as well )

If any of these are NOT issued / given by certain ” Dates ”  ( very easily managed  !  ) , then the quoted price to go up by X / Y / Z  amount

Invariably , these clauses are heavily  tilted in favor of the Contractor

And equally invariably , colluding Government officers / bureaucrats / politicians , responsible for drafting / approving these ” Clauses ” , leave them vague !

This is apart from framing the Tender Specifications in such a manner that only a certain preferred bidder will qualify !

If you doubt what I have said , then just file a RTI application , asking for a copy of,

*  Original Tender Document

*  Final Contract

*  Number of Price Revision Requests received / granted

for any project of your choice  !

If Narendra Modi is keen to reduce corruption , he should start by instituting MODEL  INFRASTRUCTURE  PROJECT  CONTRACT , which clearly spells out what price / time revisions can be granted and when

At the same time , internally , there must be a provision for DEMOTION / PENALTY for those officers who fail to give permissions / approvals / NOC etc, on specified dates ( milestones for the project )

hemen  parekh  (  07  July  2014  /  Mumbai  )

*  hemen  parekh  (  07  July  2014  /  Mumbai  )


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