The Polavaram Project Authority (PPA) gave the direction after receiving a letter from the Prime Ministers Office (PMO).
The PMO wrote the letter after a retired lecturer, J Choudaraiah, petitioned it alleging "large-scale corruption and irregularities" in the project's execution.
The PMO, based on the petition filed by Choudaraiah, a resident of Rajamahendravaram, directed the PPA to conduct an inquiry and submit a report.
Accordingly, PPA member-secretary R K Gupta wrote a letter on January 9 to AP Engineer-in-Chief, Water Resources Department, to "examine" the case and furnish a reply.
"This is just a departmental inquiry and not a statutory inquiry as such. We will reply (to the PPA and the petitioner) accordingly," a senior official of the water resources department said, making light of the complaint about graft in the project.
Opposition parties had been alleging for some time now that the Chandrababu Naidu government was only interested in "kickbacks" and hence had taken up the execution task on itself though Polavaram was declared a national project.
"The Polavaram issue has only backfired with the (project) estimates and other calculations going awry," said Reddy, who hails from the YSR Congress.
"From Rs 16,010 crore, the cost of Polavaram has been increased to Rs 58,310 crore without any rationale. The cost enhancement did not happen in accordance with the Central Water Commission guidelines," said Andhra Pradesh Congress Committee president N Raghuveera Reddy.
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