New Delhi, Jan 24: The Durgapur Steel Plant (DSP) has suffered cost overruns of Rs 2,160 crore in its modernisation programme spanning over eight years.As against an estimated cost of Rs 4,757 crore, the company spent a total of Rs 7,354 crore. All major jobs envisaged in the modernisation plan have been completed, according to the latest completion report submitted to the government.There has been massive time overruns - ranging from three months to as much as 65 months - in completion of various global packages. The completion of the raw material handling complex, for example, was delayed by 65 months, followed by the blast furnace complex 39 months, basic oxygen furnaces 33 months, new sinter plant 27 months and casting plant 17 months.
According to the report, cost overruns were mainly due to indigenous price escalation, increase in foreign exchange rate ranging from 90-225 per cent, consequential changes in taxes and duties and increase in interest during construction.
One of the major reasons forthe delays was disintegration of the erstwhile Soviet Union. Prior to the disintegration, all economic activities in CIS nations were controlled from Moscow and the manufacturing units and transporting authorities had to adhere to delivery schedules and commitments.These manufacturing units are now being controlled by different authorities and with a number of regulations introduced, the result was delay in manufacturing activities.
Tyazhpromexport's job has suffered seriously, resulting in delays in supply of imported equipment, structures and refractories from Russia for four global packages like blast furnace, sinter plant, basic oxygen furnaces and the raw material handling complex.
The increase in volume of work due to under-estimation by package contractors also resulted in increase in time of execution and caused funds constraint with consortium problems, resolution of which took considerable time.
It is stated that there was an overall increase in quantities of work ranging from 24 per cent to71 per cent for various activities.Increase in the volume of work was mainly because of increase in quantities of work for sinter plant (Rs 5.87 crore), blast furnace complex (Rs 297.48 crore), rolling mill part one (Rs 18.57 crore) and power distribution (Rs 13.15 crore) packages.
The DSP modernisation was implemented through 16 well-defined turnkey packages out of which six were global and 10 indigenous.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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