MMRDA terminates contract with L&T-Scomi JV, takes over operations

Town planning authority MMRDA Friday terminated the contract with the L&T-Scomi Engineering consortium that has been operating the country's first monorail network after the Malaysian company failed to meet contractual obligations despite getting several extensions.

The Mumbai Metropolitan Region Development Authority (MMRDA) also took over the project and decided to operate and maintain it, besides deciding to en-cash the Rs 2 billion bank guarantee from the operator.

"Finally, we have terminated the contract with the L&T consortium after granting them seven extensions and to operate and maintain the network on our own in the larger public interest," MMRDA commissioner RA Rajeev told reporters. The consortium could not be immediately reached for comments.

Blaming Scomi primarily for the termination of the contract, Rajeev said, "L&T was the civil works contractor and had met its contractual obligations by completing the work and so cannot be blamed for our decision. But Scomi failed to meet their contractual obligations of operating and maintaining the project apart from supplying the rolling stock."

The L&T-Scomi consortium won the Rs 24.60 billion contract in 2009 to build and operate the 19.5-km monorail network on the Chembur-Wadala-Jacob Circle corridor connecting the eastern periphery of the island city to the central parts.

The authority had slapped a show-cause notice to the operator on December 7 and the consortium has given an interim reply on December 13, he said.

Under the consortium agreement, L&T was responsible for the entire civil work, electrical and automation, Scomi Engineering, which one of the world's top three monorail manufacturers, had to bring in the rolling stocks, signaling and other operation and maintenance side of the project.

L&T was to execute the EPC side of the contract, Scomi was to supply the rolling stocks, singalling and other operations side of the project.

Rajeev said the consortium was given a long rope to enable them to recover from cash crunch, but they failed to supply the rolling stocks and also operate and maintain the 8.9-km corridor.

"As per the contract, the consortium had to supply 15 rakes, however, Scomi had supplied only 10. Of these 10 rakes, only four are operational," Rajeev said.

"We cannot continue to grant more extensions. We have decided to terminate the entire contract after they have failed to respond to our legal notices. Now, we are in the process of issuing fresh tenders to procure additional rakes," Rajeev said.

The first phase of the line, stretching 8.9 km between Chembur and Wadala, was commissioned in February 2014, against the original deadline of 2010.

Rajeev further said the Rs 2 billion received as bank guarantee from the consortium will be en-cashed.

"The authority has already paid Rs 67 crore to the consortium in 2015 to overcome their cash crunch and another Rs 16.34 crore was paid between February and October 2017. However, they failed to even pay the rent for the casting yard, despite several reminders.

"Since Scomi has failed to meet its obligations, we have decided that the bank guarantee paid by the consortium will be treated as penalty," he said.

He further said following the termination of the contract, 198 Indians working on the project, will be absorbed by the authority.

The authority had first proposed the monorail in November 2005 and in 2008, the contract for the 18.5 km long first-line connecting Jacob Circle, Wadala and Mahul via Chembur was awarded to L&T, along with the Malaysian firm.

The state had also planned to construct nine other monorail corridors, however, with the failure of the pilot project, it abandoned the plan to build a 190-km of monorail network across the Mumbai metropolitan region.

The entire 19.5-km Chembur-Wadala-Jacob Circle corridor was due to start in December 2010, but instead, only an 8.9-km line between Chembur and Wadala under phase 1 was finally opened on February 2, 2014.

However, the operations were shut after a coach went up in flames on November 9, 2017, while the phase 2 between Wadala and Jacob Circle is yet to be commissioned.

The commissioner further said the second phase will be commissioned in the next three months.

"We will be issuing global tenders not only for spare parts and tyres for replacement, but also for additional 10 rakes. We hope in the next three months we will be able to commission the second phase depending on when we get the rakes," he said.

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