BAI: Price hike in materials may lead to bankruptcy

The Builders Association of India (BAI) has written a letter to Chief Minister Uddhav Thackeray and administrative officers expressing their fear that the contractors unable to tackle the abnormal hike in raw material prices will end up bankrupt, which will affect the development projects across Maharashtra.

Harshad Shah, chairman of BAI Mumbai Centre, said that sudden and unprecedented price rise has put contractors in soup. "The contractors cannot absorb the price rise as there is no clause in the tender of paying the difference of price as the contractors are working on the fixed contract rates. With the present restricted price variation / escalation clauses, the government contractors will face heavy losses and will go bankrupt," Shah said.

The BAI has urged the CM to give some relief to the industry. "The government should pay the difference of rate of major construction materials from the date of submission of tender till the date of execution of the work of control items considering the basic rate on the due date of the tender, over and above the regular price variation. Escalation and price variation to all the works having time period of upto 12 months also without any upper limit restriction. Star rate of cement, steel, bitumen, etc to be mentioned in future tenders to avoid further complication. Maharashtra government should consider having a standard bidding document across all its departments and semi-government works authorities, to avoid litigations and complications," the letter reads

The 40,000 members of BAI, the apex body of civil engineering construction contractors with over 200 centres across India, are majorly government contractors dealing in building, road constructions and other infrastructural works. All these contractors are registered with government, semi government departments such as NHAI, CPWD, MES, state PWDs, state housing boards, local self governments, Railways among others, it stated.