Large-scale irregularities in AP irrigation projects: CAG

The Comptroller and Auditor General of India (CAG) has cited large-scale irregularities in the implementation of irrigation projects at multiple levels when Y S Rajasekhara Reddy (YSR) was the chief minister of Andhra Pradesh.

In a report pertaining to the Rs 1.83 lakh-crore Jala Yagnyam (Water Mission) featuring 86 projects, the statutory auditor presented facts explaining the irregularities. The project, according to the then government, was aimed at creating irrigation potential for about 10 million acres of farm land. The report is based on the performance audit of select projects implemented between 2004 and 2012.

As on March 2013, around Rs 80,000 crore has been spent on these projects after the YSR government had announced the massive irrigation development programme in 2004.

Jala Yagnyam targets missed
From 2004-05 to March 2013, only 22 per cent of the Jala Yagnyam targets, in terms of creating new ayacut and stabilisation of the old ayacut were achieved, according to a recent report prepared by the state legislative assembly's standing committee on the irrigation sector.

The report cited irregularities such as lack of transparency in awarding the contracts, violation of rules, fixing different costs to the works of similar nature and adding certain taxes to the project cost where they were not supposed to. It quoted instances where crores of rupees in excess of the estimated contract value was allowed to be pocketed by the contractor by introducing typing errors.

The YSR government had adopted the EPC (engineering, procurement and construction) system for the time-bound execution of these projects, while creating two categories of work packages-one with the contract value of over Rs 100 crore and the other of Rs 50-100 crore. It had empanelled 19 firms under category-1 and 65 under category-2.

Contract specifications diluted
The CAG report said the criteria for empanelment of firms were altered later by diluting the eligibility parameters. However, for some strange reasons, most contracts were awarded to firms under the open category (other than these two), though some of the empanelled firms in the two categories had again got contracts under this third category.

"Out of 649 packages worth Rs 1.23 lakh crore, only 227 packages (37 per cent) valuing Rs 23,771 crore were entrusted to the empanelled firms, while the remaining 422 packages worth Rs 99,866 crore were awarded to firms under the open category," the CAG said.

The empanelled joint venture (JV) firms changed their partners several times during 2004-12 to form new JVs to win works in the open category. In one instance of the Pranahita-Chevella project, four Andhra Pradesh-based firms-Megha Engineering and Infrastructure Ltd; Maytas Infra, SEW Infrastructure Ltd and NCC Ltd-were involved in 15 contracts worth Rs 21,843 crore by forming JVs in 15 different combinations.

The report put out a list of eight companies that were involved in work packages, whose total contract value was upwards of Rs 10,000 crore. Referring to the list, CAG said despite a specific request for the details of incorporation of JVs and the extent of individual firms' interest in each of these contracts, the department did not share these.

In the list, MEIL, SEW and Maytas occupied the top three positions, respectively, in terms of value of contracts. MEIL, which stood top among the three firms, was not in the original empanelled list, alongside the likes of AAG and ABB, but teamed up with partners of various empanelled firms to obtain contracts under the open category, the report stated.

Project estimates raised
In one of the findings, the report said there was no uniformity in preparation of the estimates for various projects, while the internal benchmark (IBM) estimates were worked out at increased amounts on five fronts-higher estimation of quantities, higher estimation of costs of components, inclusion of duties and taxes-which do not cover irrigation projects. The total impact of these components in increasing the IBM values in the test checked cases was Rs 3,129.5 crore.e.

This was in addition to the abnormal increase in project cost at a later date (Dummugudem project cost was increased by Rs 10,000 crore), overestimation of quantities and quantum of work among other things, according to the report.