Amaravati Metro Rail Corporation will be the full-fledged owner of the project
Amaravati: The Andhra Pradesh State government has asked the Amaravati Metro Rail Corporation, the apex agency for administering the metro rail project in the new capital region Amaravati (comprising of Vijayawada-Guntur-Mangalagiri-Tenali urban localities), to finalise the conditions of the revised draft agreement with the Delhi Metro Rail Corporation which had been appointed as the executing agency for the project and enter into an agreement for executing the project on turnkey basis.
The government had made AMRC would be the full-fledged owner of the project and it will have a role in the finalisation of all the major contracts and provisions specified in the draft agreement enabling it to have sufficient control over the project. The Vijayawada metro project is yet to receive concurrence from the Government of India and the government, in its draft guidelines, stressed the need for entering into a tripartite agreement involving the DMRC, the State and Central governments.
The government said, in the order issued on Friday, that the Central government would have 50 per cent partnership in the AMRC and a condition would accordingly imposed in the sanction order. The same would prevail over all other agreements that would be entered into for the project, Municipal Administration Principal Secretary R. Karikal Valaven said pointing clauses in the similar agreement signed between the DMRC and the Kochi Metro Rail Corporation.
The government had already Rs. 10 crore to the DMRC as a token fund to enable it to start preparatory work on behalf of the Amaravati Metro Rail Corporation. The DMRC, in its response to the guidelines, informed that in case the Japanese International Cooperation Agency was willing to extend tied loan to Vijayawada and insist on appointment of general consultants, the condition could be agreed to with limited role for such consultants as the DMRC would be responsible for the execution of the project.
The DMRC, however, did not agree to the tripartite agreement as such a provision did not exist. The Government had indicated that the DMRC could claim their remuneration against the project component cost which comes to Rs.222.40 crore plus escalation cost as per WPI. The DMRC agreed to the formula suggested by the Government and indicated an extra fee of six per cent on contingencies and three per cent on all items that would be Rs. 111.20 crore in addition to escalation of 7.5 per cent which comes to Rs. 937.15 crore (taking the total project cost to Rs. 1.048.7 crore).
A fee of six per cent on this would come to Rs. 62.9 crore over and above the Rs. 222.4 crore agreed by the State government taking the total to Rs. 285.3 crore. The government, however said, the actual cost of contingencies and escalation could be known during the execution of the project and it was premature to decide any claim of remuneration at this point of time. “It is proper to allow the remuneration of six per cent based on the actuals as and when the expenditure is known,” an order issued by the government said.
Default and exit clauses
The agreement between the parties should also have default and exit clauses as a statutory requirement and efforts should be made to complete the priority corridor of the project by December 2018. Information pertaining to the major milestones of completion within the target date should be incorporated into the agreement and any changes in the contents of the agreement should be by mutual consent. According to the order, if the execution of the project was extended beyond the period prescribed in the agreement, the remuneration payable to DMRC should be limited to the actual expenditure incurred by the executing agency.