Govt Orders To Extend Dispute Avoidance Mechanism For All Power Projects

Govt Orders To Extend Dispute Avoidance Mechanism For All Power Projects

The Ministry of Power, in its latest notification, has notified changes in the norms for the Dispute Avoidance Mechanism. In its latest addendum to the norms, the ministry has ordered extending this service to other energy sectors beyond hydroelectric power plants. Earlier, this mechanism was confined to only hydropower projects. 

On September 27, 2021, the ministry proposed a model contract provision for a Dispute Avoidance Mechanism through an Independent Engineer (IE) in the construction contracts of Central Public Sector Enterprises (CPSE) executing power projects. 

In its order, the ministry said that the platform was widely utilized by the hydro CPSEs under the ministry. It also played a key role in mitigating time and cost overrun in hydro projects by resolving disputes in the inception stage. 

“A need has been felt to replicate the mechanism in other power sector projects. In view of the above, in continuation of this Ministry’s OM of even number dated 27.O9.2O21, the ‘Dispute Avoidance Mechanism’ through ‘Independent Engineer’ is hereby extended to all power sector projects being executed by the CPSEs under the administrative control of Ministry of Power,” the order read. 

The ministry said that the standard operating procedure and terms and conditions for payment to independent engineers should remain the same as per the original norms issued in 2021. It also said that the panel of independent engineers with domain expertise in the thermal and transmission sector would be notified by the ministry in due course. 

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As per the SoP, the ministry prepares a panel of domain-specific experts with high integrity and a proven track record by adopting a transparent and objective selection process per the selection criteria. Under this agreement, the CPSE and the contractor jointly select one member from the panel of experts for each package of work who is designated as an Independent Engineer for each contract. They are appointed for a period of five years or a contract period, whichever is less.