Hyderabad: With the state government and L&T missing milestones in building the Hyderabad Metro Rail, the clause in the agreement that covers penalty for delaying the project is to be relaxed.
Under the agreement, the government is liable to pay L&T a penalty of Rs 32 lakh a day for the delay in handing over the required land — the right of way — to build the project. L&T is liable to pay Rs 64 lakh per day if it delays the project.
The 72-km Metro Rail was scheduled for completion on July 5, 2017, but L&T announced recently that it would take time at least till December 2018.
Key dates Contract awarded to L&T in July 2010; agreement signed in September 2010.
Though neither side is insisting that the other pay up, the concessionaire agreement is being amended as a “precautionary measure” to fend off possible legal cases.
During a media interaction earlier this month, Mr Shivanand Nimbargi, the newly appointed managing director and chief executive officer of L&T Metro Rail (Hyderabad) Ltd, gave indications to this effect. He said, “The delay is liable to attract the penalty provision under the Force Majeure clause of the agreement. The company is in talks with the government to sort out the issue.”
Force Majeure refers to “chance occurrence,” unforeseen circumstances that free both parties in a contract from liability.
Official sources in the municipal administration department said, “The issue has been taken to the notice of Chief Minister K. Chandrasekhar Rao. He was informed about the need to relax the penalty so as to avoid legal troubles in future.”
