The Brihanmumbai Municipal Corporation (BMC) and Larsen & Toubro (L&T) are engaged in arbitration over a Rs 200 crore cost escalation dispute in Mumbai's Coastal Road (South) project. L&T is involved in the construction of package 1 and package 4 of the project and it is seeking an additional Rs 100 crore for each of the two construction packages. This is due to disagreements over base index to be referred for cost calculation. The Coastal Road project is an ambitious project of the BMC and it aims for completion by May 2024.
The Brihanmumbai Municipal Corporation (BMC) and Larsen & Toubro (L&T) are engaged in arbitration over a Rs 200 crore cost escalation dispute in Mumbai's Coastal Road (South) project. L&T is involved in the construction of package 1 and package 4 of the project and it is seeking an additional Rs 100 crore for each of the two construction packages.
The Coastal Road project, a significant infrastructure endeavour, stretches from the Princess Street flyover to the Worli end of the Bandra-Worli Sea Link, encompassing 4.35 kilometres of road on reclamation, 2.19 kilometres on bridges, and 2.072 kilometres of tunnels. The road on reclamation and bridges will have 4+4 lanes. Of these 4 lanes on each side, one lane will be reserved for the Bus Rapid Transit System (BRTS) / emergency vehicles. The tunnel has 3+3 lanes of which one lane will be for BRTS.
The BMC had initially anticipated completing the project by 2023; however, due to the dispute and other factors, it is now expected to be fully operational seven months later than the original deadline.
One of the key contentions centres around the base index referred to by L&T for cost escalation—December 2017, while the officials assert it should be based on the February 2018 index. The tender conditions specified that the base value should be calculated 28 days before the tender submission date. The disagreement on the choice of index has resulted in a substantial cost difference of Rs 200 crores, intensifying the dispute.
Despite year-long attempts to resolve the issue at various levels, including committees formed by BMC, the disagreement persists. If arbitration fails to provide a resolution, both parties may resort to legal action. An arbitrator, mutually agreed upon, has been appointed, and the BMC has presented its defence during arbitration proceedings, awaiting a final decision.
Despite attempts to gather insights from the chief engineer of the Coastal Road (South), there has been a refusal to comment on the matter. Similarly, L&T officials have declined to provide an official statement.
As the arbitration process unfolds, the fate of this pivotal infrastructure project hangs in the balance, with implications not only for the immediate dispute resolution but also for the broader landscape of collaborative ventures between civic bodies and construction entities in India's urban development initiatives.
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