Date:08/07/2008 URL: http://www.thehindu.com/2008/07/08/stories/2008070859920100.htm

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Government contractors threaten to stop work

Sharath S. Srivatsa

Projects worth Rs. 2,000 crore likely to be hit

BANGALORE: Even as prices of construction material are going up, civil work being taken up by various government departments are likely to be affected following the decision of the Karnataka State Contractors Association (KSCA) to stop work till the Government notifies an escalation clause.

The decision to stop work was taken at KCSA’s executive committee meeting on July 4, KSCA General Secretary D. Kempanna told The Hindu.

It is learnt that projects estimated at Rs. 2,000 crore that are in various stages of construction are likely to be affected as nearly 35,000 contractors, who are members of KSCA and its affiliated associations, have agreed to abide by the decision.

Mr. Kempanna said that the resolution copies were sent on Monday to the departments of Rural Development and Panchayati Raj, Irrigation, Public Works and many urban local bodies that are implementing civil work. “The association has been requesting the Government to incorporate the escalation clause to safeguard the interest of developers in times of steep cost escalation. We have informed the Government of our decision, and our district-level units will start implementing the decision in phases,” Mr. Kempanna added.

The Uttara Kannada district unit will implement the association’s decision on Wednesday.

Mr. Kempanna said, “While the cost of steel (TMT bars) has increased from Rs. 38,000 a tonne during the last month to Rs. 50,000 a tonne now, the cost of a bag of cement has increased from Rs. 250 to Rs. 285.”

The price of steel (TMT bars) was Rs. 34,100 a tonne in the last week of January. Though Gujarat, Tamil Nadu and Andhra Pradesh had a clause for escalation cost, Karnataka was yet to incorporate it, he added.

The association has approached contractors and construction firms such as Nagarjuna and Shirke seeking support for the cause. “We have spoken to big contractors who have promised support to the agitation,” Mr. Kempanna said.

Builders Association of India-Karnataka Secretary M. Ramesh said, “The Government has also not announced the schedule of rates based on the new prices.”