AP HC gives nod for entrusting Polavaram project work to new contractor

The Andhra Pradesh High Court on Thursday cleared the decks for continuation of the Polavaram multipurpose project on the Godavari river with a new contractor.

On August 22, the high court suspended the AP Power Generation Corporation's order terminating the Polavaram Hydro-Electric Project (PHEP) contract, entered into with Navayuga Engineering Company, and directed that the process for entrustment of the project to any third party be stopped.

On Thursday, the court lifted the stay and gave the go-ahead to the state government to entrust the work to a new contractor.

The court agreed with state Advocate General S Sriram's contention that the writ petition had no value as the arbitration process was on.

Accordingly, it vacated the stay and allowed the state to proceed with the project works.

However, it may take some more time for the work to actually resume though the state government earlier announced the stalled work would restart on November 1.

On August 1, the state government issued a 'termination notice for pre-closure of works' awarded to the Navayuga Engineering Company, by the previous TDP regime, for execution of head work of the Polavaram multipurpose project.

It later conducted a re-tendering process and selected the Megha Engineering and Infrastructure Ltd for the Polavaram project head works (balance) and the 960 MW hydropower project.

The government claimed that the re-tendering process resulted in a saving of Rs 780 crore as the bidder quoted a price of Rs 4,359 crore as against the estimated commercial value of Rs 4,987 crore.

Separately, it awarded another package of Polavaram work to another contractor through 'reverse tendering' and claimed a saving of Rs 58 crore on that.

The gross saving, thus, was put at Rs 839 crore.

All the work related to the Polavaram project virtually remained stalled since March this year, primarily due to lack of funds.

The state claimed that the Centre had to reimburse Rs 4,508 crore on the work already done on Polavaram and had been making repeated pleas for the release of the amount.

As the cancellation of Navayuga's contract led to a controversy, with opposition parties alleging that the Jagan Mohan Reddy government was not interested in completing the project, state Water Resources Minister Anil Kumar announced on different occasions that the work would be resumed on November 1.

While the court case hampered award of the fresh contract, continuing floods also caused a major hindrance.

"With the high court verdict, all hurdles have now been cleared for Polavaram. We are saving a lot of money through reverse tendering. The court verdict is a slap on the opposition's face," Anil Kumar said in a statement on Thursday.

He said the project works would be started as soon as the flood in river Godavari abated.

The irrigation part of the Polavaram multipurpose project will now be further delayed as the government set a two-year deadline for completion of the head work.

For the hydropower project, 58 months time has been given to the contractor.

After many revisions, the then TDP government set June 2020 as the final deadline for Polavaram(irrigation component), but it will now stretch beyond November 2021.