The Andhra Pradesh government has decided to terminate the contract awarded to Navayuga Engineering Company for execution of head works of the Polavaram multi-purpose irrigation project and call tenders afresh for selecting a new agency.
A 'termination notice for pre-closure of works' was accordingly issued to the NEC based on the recommendation of a high-level expert committee with project Chief Engineer B Sudhakar Babu serving the notice as per Clause 89.3 of the agreement.
"During the meeting conducted by the expert committee, it was opined that entrustment of part works deleted from the original EPC (engineering, procurement, construction) agency under Clause 60 (C) to Navayuga on nomination basis by converting the EPC contract to LS (lump sum) contract, is not appropriate," the chief engineer said in the notice.
Further, he said, the committee opined against relaxing the agreement clauses for procurement of diesel through special revolving fund and procurement of steel and cement through direct payments by the (water resources) department to the suppliers.
"In view of this, it has been proposed to pre-close and terminate the LS contract agreement as per Clause 89.3 and entrust the balance works to a new agency by calling fresh tenders, ensuring transparency in the tendering system," the chief engineer added.
The company has been asked to "give consent\representation on mutual consent basis" and also to settle final accounts within 15 days.
The development comes against the backdrop of Chief Minister Y S Jagan Mohan Reddys announcement that his government would go for "reverse tendering" for all major infrastructure projects where financial irregularities were found.
As the then Leader of Opposition, Jagan had made serious allegations over financial misappropriation in Polavaram project works by the previous Chandrababu Naidu government.
The Polavaram project is expected to irrigate 2.91 lakh hectares, generate 960 MW of power and fulfil the water needs of industries and 540 villages in Andhra Pradesh.
During campaigning in the state for the Lok Sabha election, Prime Minister Narendra Modi had alleged that the TDP was using Polavaram like an "ATM" to draw money from the Centre and was responsible for delays in the project.
Naidu had hit back, saying the Centre was yet to reimburse Rs 4,500 crore the state government had spent in spite of the financial crisis.
Navayuga was awarded various Polavaram works worth Rs 2,914.66 crore on nomination basis in different packagesin February 2018 after the after the previous Telugu Desam Party dispensation questioned the pace of the project being carried out by the original contractor, Transtroy.
NEC was given spillway and spill channel balance work for Rs 1,244.35 crore, part of balance work of spillway and spill channel, power house foundation for Rs 918.76 crore, balance works of main dam package, including intake structure and pilot channel for Rs 751.55 crore with an agreement period up to July 10, 2020.
The Centre had subsequently approved the arrangement.
In the case of Navayuga too, it has to ratify the state government's decision to remove the contractor since it is a national project, according to sources in the water resources department.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)