CAG hauls BDA over the coals

Found to have made extra contractual payment of Rs 1.70 cr in a road project

The Comptroller and Auditor General (CAG) in its 2005 report has pulled up the Bangalore Development Authority (BDA) over the implementation of a centrally sponsored scheme.

The CAG has found that the BDA, apart from making extra contractual payments, disregarded many contract conditions. Similarly, audit review of six projects disclosed inadequacies in planning, funding, execution and monitoring. The CAG observations pertained to the 'Infrastructure Development in Mega Cities' scheme.

During August 2002, the BDA borrowed Rs 100 crore by floating 'BDA Bonds 2007 Series' mainly to fund the projects taken up under the Mega City scheme. The bonds, with a face value of Rs 10 lakh per bond, were for five years and carried an annual interest of 8.5 per cent. The issue was subscribed by Canara Bank and Indian Overseas Bank at Rs 50 crore each.

The BDA prepaid the entire amount and interest of Rs 11.07 crore on the bonds for the period August 2002 to December 2003. "The BDA utilised only Rs 55.46 crore (March 2003) on the infrastructure projects and Rs 44.54 crore was not lifted. The interest paid at 8.5 per cent per annum on the amount was Rs 4.73 crore. In view of the premature repayment and part utilisation of Rs 55.46 crore for nine months, the borrowing of Rs 100 crore was injudicious," the CAG concluded.

Similarly, the BDA incurred an avoidable expenditure of Rs 16.08 lakh on restoration of Agara lake in HSR Layout, according to the CAG.

The work of restoring the lake was executed in 2003 through a contractor. While preparing estimates of the project, the BDA excluded certain works like construction of pump house, jetty and commissioning of a borewell based on the recommendations of the technical advisor. This was done to reduce the project cost from Rs 5.73 crore to Rs 4.33 crore.

"The BDA, however, got the excluded items executed as extra items, which involved execution of extra quantities of earthwork excavation, masonry work among others in excess of 125 per cent of the original agreed quantities. The excess quantities were paid at higher rates and this involved an extra expenditure of Rs 16.08 lakh. This expenditure could have been avoided had the BDA included them in the original project plan," the CAG observed.

In another case, the BDA was found to have made an extra contractual payment of Rs 1.70 crore in the execution of Bellary Road-Outer Ring Road interchange near Hebbal lake. "The BDA paid Rs 1.70 crore towards expenditure incurred by the contractor for handling crane and other equipment though such a payment was not part of the agreement," the CAG said.

In the fourth case, the BDA undertook construction of a compound and room for security guard of a private college after acquiring land for a flyover at Dairy Circle.

"The cost of the construction was Rs 13.80 lakh. The construction was undertaken though it was not required," the CAG stated.