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 !
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
* SOMETHING HAPPENS
– 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
* SOMETHING DOES NOT HAPPEN
# 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 )