Railway Board instruct to Zonal Railways to clear all outstandings of contractors

Admin

Grant relaxations to Railway Contractors due to Covid-19 pandemic for the works completed, works under execution and final bill payments etc.

The Railways will have to ensure that if the contractor works, it may take a long time to reorganize and remobilize the work again and the expenses of the contractor will remain fully operational as before, the freight/installments of the machine will break the back of the contractor

A Railway Contractors’ forum – Gujrat Railway Contractors Association written a letter to General Manager, Western Railway and requested him for granting relaxations to Railway Contractors due to Covid-19 pandemic for the works completed, works under execution and final bill payments etc.

Letter signed by Nareshbhai Patel as vice chairman of the Association, writes to the GM/WR, they are working contractors of railways since many years, like to express our deep gratitude towards Chairman, Railway Board and Railway organization which provides opportunities and employment to a large number of people across the country and pay special thanks towards Railways who are supplying goods and essential to every Indian in this crucial time of pandemic.

He says, Indian Railways and railway contractors have a long-term relationship and the Contractor community is serving the Indian Railways since the inception of Rail Network in India while supporting the Railways at every step of infrastructure development. As all knows that Lockdown has been implemented throughout the country due to which businesses and economy has a whole came to an halt and contractors are no exception to it.

He writes, Recently Ministry of Finance & Reserve Bank of India has announced several financial relief measures relating to statutory and regulatory compliance in view of Covid-19 outbreak and to ensure the continuity of viable businesses.

However Contractors community are still waiting for relaxations from Railway Board as construction activities are totally stopped and considering the measures of Govt. and upcoming Monsoon season it is expected to be a very tough first half of FY 2020-21 for construction contractors.

In order to bring some commercial information and practical challenges faced by railway contractors to the kind attention of Railway Board, following humble submissions are presented by the Association on behalf of all railway contractors community-

Extending the time limit for submitting the Performance Guarantee

As per clause 16 (a) (a) of Standard General Conditions of Contract (GCC) issued by Indian Railways in September, 2019 – the successful bidder is required to submit a Performance Guarantee (PG) within 21 (Twenty one) days from the date of issue of Letter of Acceptance (LOA). A penal interest of 12% per annum shall be charged for the delay beyond 21 (Twenty one) days, i.e. from 22nd day after the date of issue of LOA.

As it is known fact that the Banks are currently providing essential services like cash Management etc. due to which it is unpractical for the bidder/contractor to submit the Performance Guarantee during the lockdown period.

As the events like lockdown due to epidemic of COVID-19 will fall under Clause 17 of GCC i.e. Force Majeure Clause. Therefore, with utmost respect and humble submissions we request your kind goodself to kindly instruct the Railway Divisions for extending the time limits for submitting Performance Guarantee (PG) without levying any Interest on Penalty.

The works were completed and some officers are not sending final bills for payments which are in positive side, for which the Security Deposit in form of Bank Guarantees must not require extension & must not send for encashment to bank by the railway finance/accounts department.

Providing financial stimulus to contractors

As stated in above paras, business of any construction contractor would be very tough in first half of FY 2020-21 and especially for contractors it will be a battle of survival under such hard conditions.

It is a well-known fact that major amounts of Working Capital of contractors are kept blocked in form of Security Deposits, EMDs and other deposits with Railway Authorities. We would like to draw your kind attention towards the irony faced by contractors who are liable to pay hefty Interest cost to banks & financial institutions on such blocked capital where interest charged from them lies between the ranges of 12% to 18% p.a.

As mentioned above due to halt of construction activities, wheel of cash inflows comes at standstill for us. However we are still liable to pay the Salaries, EMIs, Rentals and other fixed costs such as hefty Interest on Working Capital facilities availed from bankers.

In order to keep the contractors alive in economy and save them from the path of Insolvency and Liquidation which will result in widespread delay of projects, defaults of payments and unemployment, it is now the need of hour to provide the contractors a financial relief package like refunding of 50% of Security Deposits in Railway contracts in lieu of Indemnity bonds etc. for all the running and old contracts.

Association requested that 50% refund of Security Deposits will act as a life line for major number of businesses and will surely save the mass number of Indians from being unemployed.

Allowing relaxation in deduction of Security Deposits & Guarantees

In extension of above requests, Association would like to submit that as Indian Economy is going through a tough time and there will be scarcity of available financial resources across the sectors & segment of India.

In this regard, it is submitted that after considering scarcity of financial resources, contractors would like to pray the Railway Authority to kindly deduct the Security deposits @2.5% and the same relaxation should be allowed to contractors in case of Performance Guarantee submissions for all the ongoing tenders with immediate effect.

The contractors community is not immune to such financial draught and in railway’s case; Indian Railway is the only authority where contractor can request the reliefs in this situation.

Reimburse the expenditure of workers at Railway Sites due to lockdown

Due to prolonged lockdown throughout the country huge number of workers consisting of carpenter, blacksmiths, plant operators, pump teams, masons, painters, engineers, supervisors, site accountants, drivers, machinery operators, sinkers, plumbers and other unskilled labourers are stuck at Railway construction sites and it is very important to provide them stay at the sites itself to curb the spread of this deadly virus. Contractors had provided food items at site during lockdown period.

As it is well known fact that most of the workers are migrated away from their homes plus construction sites are generally located at remote areas where there is least possibility for themselves to survive without the help from employers. Contractors are doing best at their level but the lives are in the hands of God.

The lives of contractors’ workers as well as his lives are in the hands of God and that too depending on the decisions of railway authorities, so kindly act accordingly and judiciously.

On Humanitarian grounds & taking the note from recent instructions issued by Rail Vikas Nigam Ltd (RVNL) regarding the reimbursement of workers’ expenditure stuck at work sites, contractors are humbly pray to Railway Board to kindly issue such relaxations for above mentioned workers stuck at work sites as well who are serving the Railways for so many year and looking towards Railway Authorities as a ray of hope in this pandemic.

Clearing all outstanding Contractor’s Bills

Association would like to represent the recent merciful situation of Railway contractors to CRB. It has been well known that there was a wide spread financial crunch in Indian Railway in the last quarter of FY 2019-20. Contractors of all size and scale were under tremendous mental pressures to execute the works at full pace even when contractors are cash starved due to non-payment of their bills for almost 3-4 months.

As of now there is huge burden of long outstanding creditors payment, EMIs, Rentals, salaries etc. on contractors, it is need of the hour for the employer i.e. Railways to come forward and support the contractors. Therefore with respect Association pray the CRB to kindly instruct the Zonal Railways to clear all outstanding bills of contractors as on date in earliest possible manner which will save our community in this unprecedented times.

Extend Completion Period without any undue pressure

Due to prolonged lockdown it is now factual that completion dates for most of the projects will be extended. This is a scenario which is uncontrollable for Railways and contractors, all have to bow down to the powers of Mother Nature.

In regard to this situation, Association would like to submit that even after lockdown period labourers will be reluctant to back at work due to widespread fear of deadly virus and it will be very difficult for contractors to pace up the construction process for compensating the time lost in lockdown.

Association would like to pray the Railway Authorities to kindly not pressurize the contractor in lockdown & post-lockdown period to speed up the process by employing more labourers and resources due to above stated reasons which is unplanned and not under the control of contractor.

For Recommencement of work during lockdown period or after lockdown period as desired by railway officers after obtaining permission from concerned authorities, kindly acknowledge and put on record :-

  1. No one had neither ever seen nor ever heard such situation in the country nor there is any such provision in the contract to the effect that whatever type of expenses incurred by the contractor for the disease of Corona virus, expenses of labour testing, facilities and facilities provided to labour and staff to fight the Corona virus. Thus keeping in view the limited resources and already financial distress of the contractor it is advisable that All such types of facilities and or expenses for the same treatment and testing will be provided/given to the Railways.
  2. Apart from this, it must be provided in in the prevailing circumstances of uncertainty of future situation of C9vid-19 and financial instabilities resulting there from that if for any reason any employee supplier or contractor himself suffers from this disease (working), then the responsibility of compensation will be solely and only of the Railway administration and the Railway administration will have to write in writing that the contractor or any employee of the contractor shall not be subjected to any form of punishment or financial liability.
  3. Apart from this, it must be provided in the prevailing circumstances of uncertainty of future situation of Covid-19 and financial instabilities resulting from Covid-19 the department should give a choice/option to all contractor for foreclosure of contract on as is where is basis and or in the alternative be paid suitable compensation for period of no work with twice of stipulated period extension of time and PVC benefits on all components including fixed components.
  4. It is known to the railway authorities that during Covid-19 the staff of contractors, labor, machinery operator, truck driver, suppliers or the team of the contractor is almost disturbed, disengaged, unorganized and disbanded.

Due to the epidemic of Corona virus and the lockdown that has been done by the govt and the railways are the govt itself, that’s why all types of responsibility and consequences rests with the railways/department / government.

Therefore, in the event of restarting the work, the Railways will have to ensure that if the contractor works, it may take a long time to reorganize and remobilize the work again and the expenses of the contractor will remain fully operational as before the machinery does not run, the freight of the machine or the installment of the machine will break the back of the contractor, there will be an atmosphere of fear on the sites.

Due to this fear, labor or staff may also be reluctant to visit the sites and it may also happen that contractors will have to call staff or labor by making more payments.

Nevertheless, the entire make-do may not be able to be connected again, so the railways will have to ensure that whatever expenses are incurred on the re mobilization, such as the cost of bank guarantee and other expenses. Thus if after restart of work during Cov8d-19 if work gets delayed for the reasons attributed to department the contractor be paid Bank Guarantee (BG) extension charges and other losses notwithstanding anything contrary in the contract.

Apart from this, if the contractor himself falls / becomes victim of corona, then the railway deptt will have to ensure that within the 3 months of the contractor Release all kinds of payments, release the payment of work to his family while making security money.

And the goods which are lying on the site of the contractor should be taken into his possession and also pay the contractor’s family at a reasonable price within 1 year so that the family of the contractor will not face any kind of problem in the future due to the money and other benefits of Corona Warriors.

With utmost respect, Nareshbhai Patel said, as an Association and citizens of gratitude towards Indian Railways and its Authorities who are India and serving the nation for years kindly consider our demands in view of current situation.

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