Delhi Government Approves Revised Cost Estimates for Hospital Projects
Approval of Revised Costs for Hospital Projects
New Delhi, August 5 - Under the leadership of Chief Minister Rekha Gupta, the Delhi government's Expenditure Finance Committee (EFC) has sanctioned revised cost estimates for three hospital projects. Additionally, the committee has instructed a vigilance inquiry into the payment process of ₹94 crore related to the expansion work at Lok Nayak Jay Prakash (LNJP) Hospital, which falls under arbitration.
During its recent meeting, the EFC accepted the health department's proposal to increase the construction cost for a new block at LNJP Hospital from ₹533.91 crore to ₹1,268.85 crore and decided to recommend these changes.
The revised estimates will now be presented to the Cabinet for approval. The committee has mandated a vigilance investigation into the payments made under the arbitration ruling associated with LNJP Hospital, believing this to be a significant factor in the project's cost escalation.
Officials reported that the EFC also approved revised estimates for the Madipur and Jwalapuri hospital projects. The health department has been directed to provide a detailed report on the arbitration ruling and to investigate whether any FIR was filed against the previous contractor, along with obtaining the latest status of investigations by the vigilance department and the Anti-Corruption Branch (ACB) related to the hospital projects. According to official documents, the LNJP Hospital project was initially approved in 2019 with an estimated cost of ₹533.91 crore.
This project includes the construction of two basements and a 22-story building for pharmaceutical, maternity, and advanced pediatric services, which would increase the hospital's capacity by 1,570 beds. The health department indicated that construction was underway when disputes arose regarding contractual terms and payments for structural steel work. The contractor utilized the dispute resolution process outlined in the contract, and subsequently, the arbitration tribunal ruled in their favor.
Following this, the contractor approached the Delhi High Court for the implementation of the arbitration ruling, leading to the release of funds, while the court ordered the attachment of accounts in the PWD health zone for recovery. The department informed the committee that ₹586.09 crore has already been spent, with the project being 55% complete. The revised cost estimate now stands at ₹1,268.85 crore, which includes ₹682.75 crore needed to complete the remaining work.
This cost increase is attributed to the arbitration ruling, the rise in GST rates from 12% to 18%, increased costs of construction materials and labor, and changes made to hospital services following the COVID-19 pandemic. The committee noted that the arbitration tribunal had directed a payment of ₹94.61 crore. In the same meeting, the EFC approved a revised cost estimate of ₹466.50 crore for the Madipur hospital project, which includes ₹203.60 crore for the remaining work. The committee also approved a revised cost estimate of ₹484.04 crore for the Jwalapuri hospital project. The health department stated that both hospitals are 65% complete.