CHENNAI: The Greater Chennai Corporation (GCC) is reeling under severe financial crunch, leading to unpaid dues to the tune of Rs 1,800 crore to its contractors.
Speaking to TNIE, a senior corporation official said steps are being taken to address the issue and ensure outstanding payments are cleared gradually and steadily. He said the outstanding dues comprise not only pending capital works bills but also liabilities arising from various contracts, with a significant portion attributable to operation and maintenance works. “Every month, the corporation has to pay around Rs 50 crore to Rs 60 crore towards conservancy contracts alone. In addition, the dues also include payments pending to other outsourcing contractors,” he said.
The official added, “We are already working on it by creating payment schedules, invoice discounting mechanisms through RXIL (a TReDS platform), among other measures. We are also focusing on improving own-source revenue flows in terms of property tax and others so that liabilities can be reduced gradually and steadily.”
Meanwhile, contractors told TNIE delayed payments are causing significant financial strain, forcing them to bear additional interest costs, resulting in avoidable losses of nearly 6-7%.
R Rama Rao, president of the GCC Contractors’ Association, said the civic body currently owes him around Rs 14 crore, with payments pending since February.
“Once a bill is submitted, it has to pass through multiple levels of scrutiny, including ward and zonal-level engineers, the superintendent engineer, and finance sections, before reaching the centralised finance section. The entire process takes about one to one-and-a-half months. Even after the bill is approved, payments are often delayed due to a lack of funds,” he said.
He said most contractors rely on overdraft facilities and bank borrowings to execute civic works. “When payments are delayed for several months, we continue paying interest on these loans, which leads to substantial losses. While the corporation releases small amounts intermittently, fresh dues keep accumulating as new works are undertaken,” he said.