NHAI, vide policy circular dated September 9, 2024, clarified whether Clause 16.2 or Clause 16.6 of the model concession agreement for HAM projects will be applicable in relation to change of scope of proposals. NHAI observed in its circuar that this clarification was necessary as it had observed that different technical divisions/ROs/Project Implementation Units ("PIUs") of NHAI have been applying these provisions in an inconsistent manner.
Clause 16.2 of the model concession agreement for HAM projects specifies the procedure to be followed in case the project implementing governmental authority requests for a change of scope and issues a change of scope notice to the concessionaire. The provision states that if the project implementing governmental authority determines that a change of scope is necessary it will issue a change of scope notice to the concessionaire and the concessionaire will inform the governmental authority the impact of such change of scope and the options for implementing such change of scope and the cost and time for implementing the options. Upon receipt of the information from the concessionaire, the project implementing governmental authority agrees upon the cost and time estimates provided by the concessionaire and issues the binding change of scope order to the concessionaire.
On the other hand, Clause 16.6 of the model concession agreement deals with a situation and prescribes the procedure to be followed if the concessionaire fails to complete any construction works on account of force majeure or for reasons attributable to the project implementing governmental authority and due to which there is reduction in scope of work. Clause 16.6 goes on to specify the manner in which the cost of the reduced scope of work is to be computed.
The circular has provided standard operating procedure as to which provision is to be applicable in which scenario and some of the key scenarios discussed are as follows:
- De-scoping of certain length of the project at the beginning/end of the project highway: In this scenario Clause 16.6 of the model concession agreement must be made applicable.
- De-scoping of bypass from a project highway and inclusion of strengthening of the existing highway (which is being bypassed): The circular specifies that de-scoping of the bypass must be dealt with under Clause 16.6 of the model concession agreement whereas inclusion of strengthening of the existing highways (which is being bypassed) will be covered under Clause 16.2 of the model concession agreement.
- De-scoping of ramp/loop from a trumpet of a project highway: This scenario must be dealt with as per Clause 16.6 of the model concession agreement.
- Replacement of 1 (one) pedestrian underpass ("PUP") with a vehicular underpass ("VUP"): Where the cost of the PUP and VUP is INR 10,00,00,000 (Indian Rupees ten crore) and INR 30,00,00,000 (Indian Rupees thirty crore) respectively, leading to a net increase in cost of INR 20,00,00,000 (Indian Rupees twenty crore), the circular specifies that such a scenario must be dealt with as per Clause 16.2 of the model concession agreement.
- Replacement of 1 (one) VUP with a PUP: Where the cost of the VUP and PUP is INR 30,00,00,000 (Indian Rupees thirty crore) and INR 10,00,00,000 (Indian Rupees ten crore) respectively, leading to a net decrease in cost. due to replacement of VUP with PUP, the same must be dealt with as per Clause 16.6 of the model concession agreement. However, for the avoidance of doubt, the net reduction of scope will not be INR 20,00,00,000 (Indian Rupees twenty crore) but will be worked out as per the method provided in Clause 16.6 of the model concession agreement.
Source: NHAI Circular dated September 9, 2024
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