At 6%, DMRC demands hiked Consultancy Fee for Thiruvanantapuram Light Metro

तिरूवनंतपुरम Thiruvananthapuram (TVC):  From the announcement of PWD minister V.K.Ebrahim Kunju in the assembly on Thursday, it is fairly certain that the government has not learned anything from its mistakes during the conception of the monorail project.

The minister had stated that the board of Kerala Monorail Corporation Ltd (KMCL) has decided to appoint Delhi Metro Rail Corporation (DMRC) as turnkey consultant of the Light Metro projects in Thiruvananthapuram and Kozhikode.

It is reliably learnt that DMRC has asked for a consultancy fee of 6% of the project cost, against the global rate of 1.25-2.5%. If the government approves DMRC’s demand, at least Rs 403 crore will have to be paid as consultancy fee alone for the Thiruvananthapuram and Kozhikode Light Metro projects.

The minister stated in the assembly that the project will not be implemented without global tender. But, he conveniently hid the fact that global tender must begin right from the selection of consultant if the guidelines set by the chief vigilance commissioner are strictly followed. Major metro projects such as Chennai, Mumbai and Bangalore adopted the global tender route for selection of consultants and it helped them save crores of rupees as the shortlisted agencies only charged 1.25 – 2.5 % as consultancy fee, sources familiar with the projects said.

Minister V K Ebrahim Kunju, however, said the decision to award turnkey consultancy to DMRC was taken as it was a public sector company, with stakes owned by the Delhi and Union governments. “For Kochi Metro project too, the consultancy was awarded to DMRC without tender,” he said. When asked about the high rate quoted by DMRC, Kunju said it was negotiable and the government would try to bring it down through negotiation.

However, experts warn that awarding consultancy on nomination basis violates the Central Vigilance Commission guidelines. The CVC circular issued in 2007 states thus: “It is needless to state that tendering process or public auction is a basic requirement for the award of contract by any government agency as any other method, especially award of contract on nomination basis, would amount to a breach of Article 14 of the Constitution guaranteeing right to equality, which implies right to equality to all interested parties.”  However, it is also a practice in various state and central government projects that such work orders can be placed on nomination basis on the empanelled players from the Government Sector.

Media had earlier exposed loopholes in the DPR prepared by DMRC for the proposed Light Metro. Experts point out that the consultancy fee charged by DMRC was much higher compared to the common rates. “They charge huge cost and prepare a DPR with so much loopholes. This is something which needs serious introspection. The government must look into other metro projects in the country before repeating such mistakes,” said a senior official on condition of anonymity.

DMRC had charged a consultancy fee of 6% for Kochi Metro Rail and 3.25% for monorail.

DMRC made consultant flouting set guidelines

Selection of Delhi Metro Rail Corporation (DMRC) as a turnkey consultant of the proposed light metro project in Thiruvananthapuram and Kozhikode was against guidelines for selection of consultants set by various constitutional bodies. Besides central vigilance commission,planning commission and Supreme Court have time and again warned against selection of consultants on nomination basis.

The ‘Best practices for selection of consultants’ issued by secretariat for committee on infrastructure under the planning commission has explained that consultants could not be selected on nomination basis. It has also listed certain special circumstances where appointment of consultants could be done on nomination basis.

The special circumstances include emergency situation such as natural disaster which demand timely completion of work, natural continuation of previous work carried out by the same consultant or execution of work involving proprietary technique. However, the guidelines make it clear that selection by nomination may normally restricted to a financial ceiling of Rs 10 lakh.

However, the state government has decided to award DMRC a project with estimate Rs 6,728 crore. That too with a consultancy fee of 6%.

The central vigilance commission’s ‘common irregularities/lapses observed in stores/purchases, contracts and guidelines for improvement in procurement system’ states that consultants must be appointed in a transparent manner following competitive tendering system. “The consultant is meant to assist the departmental officers because of lack of expertise and it should not mean that they takeover all functions,” the guidelines say. However, DMRC, in its detailed project report, has stated that Kerala rapid transit corporation must remain as a ‘lean’ organization and get the project executed on a turnkey basis by a responsible agency exactly in the same way Kochi Metro project is being implemented.

The guidelines also state, “Penal clauses for deficiency in service should invariable be stipulated in contracts/MOUS with the consultants”.

The SC in Nagar Nigam, Meerut vs Al Faheem Meat Exports Pvt Ltd case has emphasized that all the public tenders should be in an open and transparent manner with adequate publicity. In this judgment, the SC has stressed that award of contract on nomination basis should be resorted to in rare and exceptional cases only.

MLA Palode Ravi, who had raised concern about the hasty move to hand over the light metro project to DMRC in the assembly the other day, said DMRC should also participate in a global tender to win the consultancy contract. “We need to introspect the style of awarding such contracts. Let it be Kochi Metro or monorail, we get only single bids when tenders are called for. This needs to be probed,” he said. Ravi said he would take up the matter with the chief minister and try to ensure maximum transparency in such projects.