The Ministry of Power has announced significant amendments to its Dispute Avoidance Mechanism for construction contracts within Hydro Power Projects executed by Central Public Sector Enterprises (CPSEs). These revisions, made after consultations with the Central Electricity Authority (CEA) and various CPSEs, aim to refine the role and engagement of Independent Engineers (IEs) to prevent disputes and ensure seamless project progression.
The original mechanism, introduced on September 27, 2021, established the role of an Independent Engineer to resolve conflicts between Hydro CPSEs and contractors at the initial stages, thereby mitigating escalations and avoiding costly delays.
Key Amendments to the Mechanism
Revised Retainership Fee
The retainership fee for an Independent Engineer has been fixed at Rs. 100,000 per month for FY 2025-26. This fee is considered full payment for the IE’s availability, ongoing project awareness, and all associated office and overhead expenses. The retainer fee for experts will see an annual increase of 10%.
Expanded Engagement Capacity
A notable change allows an IE to be engaged in a maximum of two CPSEs (including their Joint Ventures/subsidiaries) and a maximum of two contracts/packages within each engaged CPSE. This modifies previous limits to broaden their scope of work while maintaining oversight. The retainership duration cannot extend beyond three months after contract completion, and the fee will be shared equally by the CPSE and the Contractor, with initial payment made by the CPSE.
Site Visit Fee Update
The reference financial year for the daily site visit fee has been updated to FY 2025-26, maintaining the existing framework for reimbursement of travel and meeting expenses.
New IE Panel & Transition
The existing panel of 19 IEs, established in November 2021, will be withdrawn once a new panel is finalized. However, IEs currently engaged by CPSEs will continue their services under their existing terms and conditions. Future IE engagements by CPSEs must be from the upcoming fresh empanelment list.
Age Limit for IEs
New eligibility criteria introduce an age limit for Independent Engineers. The maximum age to apply as an IE is now 65 years, and the maximum age to work as an IE is 70 years.
