Date:03/12/2006 URL: http://www.thehindu.com/2006/12/03/stories/2006120304660600.htm

Andhra Pradesh

10 p.c. profit allowed to contractors in A.P.

Special Correspondent

Government renews old order; step to help them absorb burden

HYDERABAD: By renewing an old order, the Andhra Pradesh Government has allowed a profit of 10 per cent to contractors executing road and bridge works in the State.

It has also permitted them to adopt 25 per cent overhead charges on cost estimates in case of bridge works and 10 per cent on road works. It is contended that this measure is aimed at helping them absorb the burden on account of sales tax/VAT, increased cost of inputs like cement, iron and diesel, and maintenance of machinery.

Contractors used to pass on this burden to road-users by collecting toll tax on all works undertaken under "build, operate, transfer" (BOT) mode. T. Chatterjee, Principal Secretary, Transport and Roads & Buildings, justified the 10 per cent profit to contractors as they had been disallowed "tender premium" (excess rate) for increased costs after agreements were signed.

At present, toll-gate is collected only on Puligadda bridge (across the Krishna), Yanam-Yedurulanka, Suryapet-Aswaraopet (on Mamillagudem Vagu) and on the Kothagudem-Nalgonda road. All these bridges were executed on BOT basis. Proposals are on the anvil to take up bypass roads for Kothagudem and Nizamabad in BOT mode.

Nearly 200 toll-plazas, which exist on State Highways executed by the State Government, have been closed following a public outcry against the heavy collections made by the contractors.