Mithi tunnel cost may rise due to GST slab change

Mumbai: The cost of an ongoing Mithi river project may increase by over Rs 21 crore as the civic administration has sought the standing committee’s approval to revise the contract value from Rs 604.3 crore to Rs 625.34 crore.According to the proposal, which is to be tabled before the committee on Wednesday, the cost escalation is due to GST being raised from 12% to 18% through a notification issued in July 2022. The contractor, a joint venture of J Kumar Infraprojects-Michigan Engineers, has sought reimbursement of the additional tax. The proposal states that legal, taxation and engineering consultants engaged by BMC have said the additional GST liability is payable to the contractor.It said if GST is reduced in future during the contract period, the contract value will be lowered in accordance with contractual provisions.The work involves diverting 168 million litres per day of sewage flowing through two nullahs during the non-monsoon season to the upcoming Dharavi sewage treatment plant through an underground tunnel. BMC earmarked Rs 34 crore in the 2026-27 budget for it. Civic officials said the project is crucial because the existing sewer network along LBS Road lacks the capacity to handle projected sewage flows.

Overflowing sewers frequently spill onto roads, while during the monsoon, sewage mixes with stormwater, increasing the risk of disease outbreaks.The contract, awarded in Aug 2021, commenced on Oct 1 that year, with a scheduled four-year completion deadline.The proposal states that tunnel excavation has been completed and shaft construction is in the final stages. Overall physical progress has reached 96.7%, with only finishing works pending. The project deadline has already been extended once and another extension for the remaining work is under process.BMC clarified that there is no change in the scope of work or the contract period, and the additional expenditure is restricted to the enhanced GST payable on design and construction components.