v As far as possible abstain from giving
advances to Contractors. That means No
payment is made except for work actually done.
v GMs may, however, sanction within their
delegation of powers - Those works which
are capital intensive and specialized nature and also when estimated value of the tender
exceeds Rs.25 Crores.
v Such advances are of four types.
I-Mobilization
Advance:
v Limited to 10% of the Contract value and
payable in 2 stages.
A. Stage I - 5% of Contract value - on signing of the Contract Agreement.
B. Stage II - 5 % on mobilization of site
establishment, setting up of offices, bringing in equipment & actual
commencement of work.
v Limited to a maximum of 10% of the Contract
value. Also Limited to 75% of the
purchase price of such
Equipment.
v Against New Machinery & Equipment, involving
substantial outlay, brought to side and essentially
required for the work. (No advance -Against
old equipment)
v Hypotheticate to the President of India by a
suitable Bond or alternatively covered by an irrevocable Bank Guarantee for
full cost of the Plant & Equipment
v The Plant & equipment shall be insured for
the full value and for the entire period.
v Such Plant & Equipment shall not be removed
from the site of work without prior written permission of the Railway Engineer.
v Decided on the merits of each case .
v By General Managers with recommendations of PCE in
consultation with PFA.
v Total of such Advance is up to Rs.100 Crores or less or as
decided by Railway Board in a year.
v Restricted to 5% of Contract value or Rs.1 Crore whichever
is less.
IV - Advances in Exceptional Cases:
v By General Managers with recommendations of PCE in
consultation with PFA.
v Up to a maximum of Rs. 5 Lakhs.
v Contracts of value of less than Rs. 50 Lakhs.
ü Interest rate -
decided by the Railway Board at the beginning of the financial year. - applicable for the tenders opened in that
financial year.
ü Advances except those against machinery and equipment, - Irrevocable guarantee (Bank Guarantee,
FDRs, KVPs/NSCs) of at least 110% of the value of the sanctioned advance amount
(covering principal plus interest). The Bank Guarantee shall be from a
Nationalised Bank in India or State Bank of India in a form acceptable to the
Railways;
ü The recovery shall commence - When the value of contract
executed reaches 15% of original contract value
ü The recovery shall complete - When the value of work
executed reaches 85% of the original contract value.
ü The instalments on each "on account bill" will be
on pro-rata basis;
ü Grant of advance is primarily in Railway's own interest
ü Not eligible - same
Advance for same work from different officers.
ü Accounts Office - responsible for payment & recovery of
such advances.
Recovery of Interest:
v Interest shall be
recovered on the advance outstanding for the period commencing from the date of
payment of advance till date of particular on-account bill
v adjusted fully against on-account bill along with pro-rata
principal recovery.
v In the event of any short-fall, the same shall be carried
forward to the next on-account bill and shall attract interest.
v The Bank Guarantee for such advances shall clearly cover at
least 110% of the value of the sanctioned advance amount (covering principal
plus interest).
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