Thiruvananthapuram: The Cabinet sub-committee on Kerala State Transport Project (KSTP) has decided to separate the issue of inquiry into allegations of corruption and the need for extension of time for completing the project.

The sub-committee, comprising Finance Minister T.M. Thomas Isaac, Law Minister M. Vijayakumar, Revenue Minister K.P. Rajendran and Public Works Minister T.U. Kuruvilla, met here on Saturday and decided to take the position that the Government would be willing to consider extension of time for the completion of the project, provided the contracting companies did not make claims for delay in payments and any other reasons since October 2005.

The committee was of the view that the project should be completed and work should resume without any delay. When contacted, Dr. Isaac said the Government was willing to give up its claims for liquidated damages, provided the contracting companies were willing to give up their claims on account of delay in payments. The Minister said there were several gaps in the project proposals that were a commentary on the consultants appointed by the World Bank.

According to sources, one of the contracting companies has expressed its willingness to forego the claims. If the formula is accepted, the Government is not averse to releasing the blocked payments, but no further extension of time will be given and penalties as laid down in the terms of agreement will be strictly enforced.

Interest

The sources said the sub-committee also discussed the question of interest for delayed payments. The committee would hold discussions with the contracting firm, Pathi-Bel, on December 8 and Road Builders Malaysia on December 4. The committee held discussions with Oriental company on Saturday. After the discussions with the contracting companies, the sub-committee would report to the Chief Minister and after discussions the proposal would be placed in the Cabinet.

Meanwhile, the World Bank has warned that the State Government would end up with large contractor claims and increased costs unless the problems relating to payments were managed efficiently.

In a statement here, the World Bank said its team had conducted a joint progress review of the KSTP with the State Government.

"The $360 million project, which seeks to improve the quality of Kerala's major roads, has already rehabilitated close to 1,000 km of State highways and introduced a number of road safety initiatives State-wide. However, implementation delays caused by slow land acquisition, payment problems and insufficient contractor resources are affecting the completion of the road widening component for 300 km of the State's arterial road corridors."

Chief Engineer shifted

Meanwhile, the State Government has shifted H.V. Haridas from his post as Chief Engineer (Projects), Kerala State Transport Project.

He will be replaced by T. Baburaj, Chief Engineer (Roads and Bridges). Mr. Baburaj has been given full additional charge as Chief Engineer (Projects). Mr. Haridas has been made managing director of the Kerala State Construction Corporation, according to an official statement here.

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