In the wake of rising steel prices, railways have revised its contract clause to avoid adverse effect on progress of its infrastructure projects besides insulating contractors from vagaries of the market.
The rising steel prices have adversely affected many ongoing railway projects across the country.
"We have revised the price variation clause for all our future projects so that work does not suffer due to abrupt market fluctuation," said a senior railway ministry official.
Though every contract has a price variation clause, it can absorb only 10 to 15 per cent price rise in the market.
"Since the cost of steel has risen upto 45 per cent over the accepted rates, the provision in the existing clause does not compensate the contractors fully," said the official.
A delegation of leading contractors involved in Railway projects had recently met senior officials in the ministry.
"They expressed their helplessness in completing the work unless they were compensated for the steep hike in steel prices and had sought a change in the existing price variation clause. So the clause was revised accordingly taking into account the actual price variation," said the official.
However, the revised clause will be applicable for future projects only and not for the ongoing ones.
Projects involving construction of bridges and buildings and manufacturing of coaches are the worst hit due to the steep hike in the price of input material, particularly steel.
"We are trying to find a solution for the ongoing projects also," said the official.
"We are working out a formula to neutralise the market fluctuation so that our projects do not come to a standstill," said the official, adding all zonal offices and construction organisations have been told to come out with suggestions to tide over the crisis.
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