Will vouch for the construction company’s credit-worthiness to help it get bank certificate
Jammu: Several companies, including ones in J&K, have come forward to vouch for the credit-worthiness of Hindustan Construction Corporation (HCC), to help it secure the Bank Performance Certificate that is holding up the contract to build the New Ganderbal Power Project.
The HCC has been missing deadline after deadline to sign its contract agreement with the J&K State Power Development Corporation (JKSPDC) for construction of the long-delayed and the much-needed New Ganderbal Power Project. An official at JKSPDC told Kashmir Reader that in its latest communication, the HCC has said that it is still waiting for approval of increased credit limit from lenders who will be meeting in mid-January.
“It is public knowledge now that civil contractors in India are facing massive economic recession,” the official said. “HCC is no different. The recession has impacted its new projects.”
After winning the Rs 820-crore bid to build the 93-MW New Ganderbal Power Project, the JKSPDC issued the Letter of Intent (LoI) to the construction company in August 2017. The HCC was mandated to sign the contract by September 4 that year, which it failed to do.
“There were excuses, one of them related to the impact of GST,” the official said. “But the HCC had actually failed to submit the required bank performance certificate, which amounted to Rs 80 crore, 10% of the project cost.”
“They sought time and we extended the final date, which has now been set as January 30, 2018,” the official said. “We kept our interests in mind, which is why we gave many extensions; otherwise, we would have cancelled the LoI.”
The official said that several companies, including from J&K, have approached the HCC with an offer that they will give guarantee for HCC. “On the vouching of these companies, the HCC can get the Bank Performance Certificate,” the official said. “This is an option before the HCC, but we do not know their internal mechanism yet. The company is waiting for approval from the Corporate Debit Restructuring (CDR) Cell for increase in its credit-limit.”
The official said that JKSPDC has already encashed the security deposit of HCC which it paid for the contract. “Rs 10 crore is in our kitty but we don’t want this opportunity to go,” he said.
The officer explained why JKSPDC is sticking with HCC despite its repeated failures to sign the contract. “To invite a new bid would take us one more year and the costs will escalate. The HCC was given the contract on costs set in 2014,” he said. “Further, we do not want one year of power generation to go waste.”
The PDC, the official said, has three options: one, to invite the second lowest bidder (L2) who would be asked to work on the cost as approved for L1 (HCC); two, the Swiss Challenge Mode in which it can make a public offer inviting constructors to come and work on the cost as approved (lower/better) for L1; and three, to invite fresh tenders.
“We are not obliged to wait for HCC but we are extending the deadline in our own interest,” the JKSPDC officer said.