Himachal terminates World Bank funded road contract to Chinese company

Shimla: For breach of contractual terms, the Himachal government yesterday served notice for rescinding a World Bank funded road contract to Chinese company Longjian Road & Bridge Ltd Co whereas the contracting company on the same day moved court preempting the state from invoking over Rs 26 cr contract guarantee money deposits.

Chief secretary of Himachal government Sudripta Roy let Hill Post know, “notice for rescinding of the contract for construction of the 80 Km long Theog-Kotkhai-Hatkoti-Rohru road has been served on Longjian Road & Bridge Ltd Co, the Chinese company that had been awarded the contract under a global bidding process as per World Bank norms.”

He said the government would be moving to claim liquidated damages even as payments of about Rs 8 crore for the contractor have been withheld.

Assets of the company have been seized and since the road is in an important apple growing area, where the harvest has just begun, the immediate priority is to keep the road operational, said Roy.

He said the road was today handed over to HPPWD and the payment withheld would be used to keep the road functional for the ensuing apple marketing season.

Meanwhile preempting the government move to evoke the company’s performance bank guarantee of Rs 11.41 Cr and mobilization advance payment guarantee of Rs 14.87 Cr, Longjian moved court on the same day the termination and demand notices were served and obtained a status quo order from HP High Court.

The Rs 228.25 Cr contract handed out in May, 2008 for widening and strengthening of 80 Km long Theog-Kotkhai-Hatkoti-Rohru was intended to be completed in 36 months ending on June 2011.

For slow and tardy work done by the Chinese contractor, three notices to correct were served and only 24 percent of the job stands completed.

For the last one month construction stands completely abandoned.

“After having terminated the contract, it would take about 2 months to re-tender the work,” said Roy, “at a time when it is of prime importance that the road is kept functional for transporting marketable apple cash crop from the producing area that the lifeline road serves.”

Global bidding adopted under World Bank norms for the project has failed to get the job executed and project geography related issues should be considered before such jobs are tendered, said the chief secretary.

Supervision consultant for the project, Louis Berger Group, the US based engineering and construction management consultancy group, has cited repetitive long lasting financial crisis and inadequate funding on the contract as one the reason for failure of the project in its notice to correct served on 24 September, 2011.

Elsewhere the project consultant points out that the project has been delayed due to non-performance of the contractor, machineries available were inadequate, against an requirement of 1000 labourers working on a day and night shift, only 81 labourers were at work at one point, a stone crusher started production on March 2011 that is 32 months after commencement of works and the contractor did not start blasting operation for 22 months from commencement of works.

Urgency of maintenance kept on increasing due to apple and monsoon season yet the contractor failed to execute the maintenance under contractual provisions, the consultant has noted.

Fifteen minor brides were to be constructed which were later reduced to 14 but poor performance in construction of bridges was due to lack of material, manpower, machinery and finances.

Of the 326 project culverts for the road work on only 80 had been taken up.

With the Chinese company executing another road project in Himachal – the Rs 126.50 crore 44.8 Km road from Mehatpu, Una to Amb which is also running behind schedule, state government officials are apprehending that dispute over the Theog-Kotkhai-Hatkoti-Rohru road could have a fallout on the other contract also.

Based out of Harbin, Heliongjiang in Nangang district; Longjian Road & Bridge Co., Ltd is a government owned project and highway construction company listed on Shanghai stock exchange that also builds bridges.

As Editor, Ravinder Makhaik leads a team of media professionals at Hill Post. Spanning a career of over two decades in mass communication, as a Documentary Filmmaker, TV journalist, Print Media journalist and with Online & Social Media, he brings with him a vast experience. He lives in Shimla.

1 Comment

  • The world over knows the shabby work chinese does. It can be seen in their products which are filling in the Indian market. I am surprised that work for these strategic roads were given to chinese when we are trying our best to keep these chinese out from the border areas in Leh etc. Why was this contract given to chinese, when there are hundreds of worlds best contractors around? Are these chinese on a reconnaissance in India? India has kept on making mistakes till these chinese coming knocking on our doors. I was in Manali and shimla last year and saw the poor conditions of the road. Heavy rains, last year forced me to take a detour to mandi from Kullu. The poor conditions and the weather played havoc. Himachal being a beautiful place, needs to develop good standard roads for tourism and business. The Govt needs to be proactive.

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