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Construction Law/Electricity Connection Fee Payment related in New Project

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Question
Dear Mr Senthil Kumar

In one of the Project Contractor rises discrepancy related to payment of Electricity Connection Fee.

Please find below the Contract reference Clauses in precedence:

a) Arabic version of Contract calls for: “Contractor’s shall carryout all the procedures necessary for connection of the power supply, water and all other services provided that the Employer shall pay the service fee”.

b) Clause 81.1; Liaison with Authorities, under Conditions of Contract, states that, "The Contractor shall pay for all statutory charges arising in connection with the Works with respect to the permanent supply of all services connections'.

c) Clause 17 under Bill of Quantities, Rates & Prices of Instruction to Tenderers calls for "Items against which no rate or price is entered by the Tenderer will not be paid for by the Employer when executed and shall be deemed to be covered by the other rates or prices in these LUMP SUM bills".  Here to note that, Contractor didn't priced in BOQ for the Electricity Connection fee.

As per all of above, i understood that, Contractor shall pay the connection fee  i.e. to obtain the permanent electricity connection for the Project and Client shall pay the Service Fee i.e the usage charges, which generally shall be applicable upon handing over of the project.

However, Contractor claims that, Client Shall pay the Connection Fee as per Arabic version of Contract and requests for Engineer's instruction stating that Connection fee payment as additional works.

Looking for your expert opinion. Please let me know, if you need any further information.

with best regards.

Answer
Dear Mr. Prasad,

Thanks for your Questions. Normally, the client will pay the Connection fee for the Electricity and Water. In your above case the condition no. 1 is confirmed that the fees will pay by the client and no. 2 means that the coordination with the local authorities will carry out by the contractor and pay the amount of all the charges. This is challenging situation for contractor.

If, he should approach the court means the contractor will won. So, the client should pay the all the fees and the contractor will pay to the local authorities. Otherwise, the contractor will pay the fees to local authorities and that client would compensate to the contractor.

In addition that, please check that the contractor offer letter or letter of Indent for this particular issues. May be the contractor excluded the scope of works or contract price.

Thanks and Regards,

Senthil Kumar  

Construction Law

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Senthil Kumar Sellamuthu

Expertise

I gained very good working and practicing knowledge in FIDIC 87 reprinted 92,99, Sub-contract 1994, Civil code of the State of the United Arab Emirates, Qatar Petroleum Contracts and Qatar Public Works Dept. Contracts. I will be answer Pre / Post tender Contractual Analysis, Cost and Time Analysis, Delay / Risk Analysis, Conditions of Contract related Issues to lies within the above mentioned type of contracts forms. I Can not answer other than Gulf Construction Laws / Contractual issues.

Experience

I have 16+ years working experience with Contracts, Consultancy & Project Management encompassing Estimation & Costing, Quantity Surveying, Project Monitoring & Execution, Techno-Commercial Operations, Cost Control, Site Administration and Relationship Management. Expertise in Commercial & Contractual matters, Quantity Surveying, Valuations, Variations, Budget & Cost Control and Project Claims, Final accounts, Contract administration and Material management.

Organizations
1. IQSA - UAE 2. AACEI - USA 3. RICS - UAE 4. DSE - UAE 5. QSi Member - UK 5. Profile in linkedin.com - http://www.linkedin.com/pub/senthil-kumar/4/6b9/700 [ Edit ]

Education/Credentials
1. Civil Engineering Professional 2. QSi Membership 3. AACEI - Certified Cost Engineer Membership 4. MRICS Professional (On going) 5. MBA (Operation Management) - On going

Awards and Honors
1. Associate Membership from AMIE - Calcutta - India 2. Certified Cost Engineer from AACEI - USA 3. Membership from QS International - UK

Past/Present Clients
1. Al Jaber Engineering - Qatar 2. Morganti Project Management INC - UAE 3. Dar Al Handasah Consultant - UAE 4. Al Shafar General Contracting - UAE 5. ETA - ASCON - UAE 6. C.T.R. & Co., - India

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