National Highways & Infrastructure Development Corporation Limited
Floor, PTI Building, New Dethi-1 10001
Ref No: NHIDCL/F8&A4/internalaudit-Pr.CCA Comp no. 207660 /Fin-| (4 Dated: 13" July
INTER OFFICE MEMO
SF serena eee
General Manager (Fin) ANED(1), NHIDCL Fars =
Subject: Inclusion of agency charges in AAFS for price adjustment/escalation paid and
for expenditure of Maintenance under DLP
A reference is invited to this office IOM No.79 dated 25" May 2022 on the subject
‘mentioned above(copy enclosed for ready reference) and to state that IA wing of the MoRTH
raised objection about the agency charges on Price Adjustment. In reply, this office submitted
Justification that price adjustment is an integral part of the Civil Cost,
2, However, til date the Technical Divisica while submitting their proposals for SEC
does not include agency charges on project expenditure on Price Adjustment and on
maintenance during DLP. To have a consistent stand of the Company, the Technical
Division is hereby requested to propose agency charges and GST thereon on the Civil
Cost ineluding Price adjustment and expenditure during DLP.
3. Incase, the Ministry does not agree for the agency charges on expenditure on Price
Adjustment and for maintenance during DLP, the same may please be intimated to this office
so that the agency charges on Price Adjustment and expenditure on maintenance during DLP
can be reversed.
This issues with the epproval of the Managing Director, NHIDCL.
) \
he 7 (Ania ay
General Manager (Fly
Copy for information to:
-
wa
1, PSioMD we
2. PS to Director (A&F)/(T)
Le
Encl: As above
vstNational Highways & Infrastructure Development Corporation Limited
3“ Bloor, PTT Building, New Delhi-1 10001
Ref No: NHIDCL/inance/SAP/2020-2021/ Comp No. 186294 Dated: 25.05.2022
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INTER OFFICE MEMO. Wein ve
os one jes
Fens Sco teee cena rere Qed
General Manager (Fin,) AILED (1) HO
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eet ray
Subject: Inclusion of Ageacy charges in ARS for Price Adjustment/Escalation Paid and Bier
for Expenditure of Maintenance under DLP Period, re
This is in continuation with the previous IOM of even no dated! 19.02 2021 (copy
enclosed for ready reference) It has been observed that the AAFS iseued by the Ministry
(MoRTH) indicates Price Escalatot/Adjustment and b) Expenditure for ‘Maintenance
under DLP period as separate items, whereas letter issued ȴ MoRTH dated 07" March
2019 (Copy Enclosed) via which total cost of construction under EPC Moc us illustrated
do not shows the same as separate items. From the above it seems that te Components as
stated above are part of base contract cost only. Accordingly Agency Charges in the
AAES should be mentioned on the base contrat cost which is payable to the contractors
based on L1 price discovered through competitive bidding, ‘
2. The Audit Team of Pr. CCA olfice MORTH has raised the observation on accounting
of Agency Charges on Price Adjustment. The AAFS do not provide for Agency Charges
on Price adjustments and are thetefore not admissible.
3. In case the Agency Charges on Price Adjustment isnot included in AAPS we ‘may not
be able to claim the Agency Charges on such expenditure, Inadmissibility of Agency
Charges on Price Escalation/adjustments will have adverse impact on the profitability of
the Company.
4. To avoid confusion the Agency Charges on Price Escalation and Expenditure for
Maintenance under DLP period may be provided in all the future AAPS to be proposed
byNHIDCL,
5: The proposed changes in AAFS are given below:
Sample Abstract of Cost.
SINo | Desetiption Amount
i Civil Cost 100,600.00
( Escalation (say @ 5% of 1) 5,000.001,07,500.
( 3. Contingencies @1% on 1 ~_| 4,000.00
(6. _| Basic Project Cost Including Contingencies | 1,08,500.00
7. GST @12% on6 13,020.00
8B Construction Supervision Charges @3% of | 3,000.00
9. Preconstruction Cost. _ [10,600.00
(2 | Agency Charges on 6 @3 % GST thereon @ | 3,840.90
18% (Effective rate 3.54%)
il “Agency Charges on 9 (LA Cost except in siate / 118.00
of Assam and Uttarakhand) @ 1% plus GST
theron @18% (Effective rate 1.18%)
Giand Total = 138478.90
ica Say (Lakhs) 1.384789
Note no 1: Agenoy Charges @ 3% SI. No 6 is charged and GST @ 18% on such agency
charges are allowed. Composite Rate including GST will be 3% + 18% of 3% LE. 3.54%
Note no 2:
gency Charges @ 1% plus GST thereon is allowed on Cost incurred for
Land Acquisition except for the State of Assam and Uttarakhand.
Encl: As Above
Copy to:
L. PS toMD for information
2. PS to Dir (T) for information
3.. Office order file