BEL was awarded the contract in November last year and after completion of all formalities, the BEL was to begin the installation of CCTVs in February this year and the entire installation work was to be completed by November 22.
In a statement, the government warned BEL, saying it would be blacklisted and would face 10 per cent penalty if the project was not completed on time.
"BEL is under legal obligation to complete the installation of CCTVs within nine months according to its agreement with the Delhi government, and in case it fails to complete the entire installation work within time, it is liable to pay a 10 per cent penalty," the statement said.
The government said the penalty clause is part of the agreement of the project, having an overall cost of Rs 320 crore.
"As a first step, since more than two-thirds of the time given to the BEL is already over, the Delhi government proposes to impose a five per cent penalty of the overall installation cost," the statement said.
The step of invoking the punitive clause follows strong displeasure of Chief Minister Arvind Kejriwal over the unjustified slow pace of work.
Out of the total 1.40 lakh cameras, the BEL has so far installed only around 16,000 - 11 per cent of the total CCTVs.
PWD minister Satyendar Jain and Chief Secretary Vijay Kumar Dev had summoned the Chairman and Managing Director of BEL to convey the government's dissatisfaction over the unjustified delay in the installation work.
According to the government, around 400 CCTVs are being installed everyday and in a meeting, the BEL CMD had said that all efforts would be made to improve this number to 1,500 CCTVs installation daily.
The PWD has also sought a schedule from the BEL on the future course of action.
( With inputs from IANS )