Mega projects in Andhra hang fire as Jagan disposes, alters TDP road map

The big ticket projects in Andhra Pradesh are caught in political crossfire. The spree of policy reversals following the change of guard in the state has thrown a spanner in the works of several key projects covering power, irrigation and infrastructure sectors, thereby adversely affecting the investor confidence.

The Jagan Mohan Reddy government’s latest move to hand over major component of works on the multi-crore Polavaram irrigation project to Megha Engineering and Infrastructure Limited (MEIL) has triggered a row. This follows abrupt cancellation of the contract awarded to Navayuga Engineering Company Limited (NECL) by the previous Telugu Desam Party (TDP) government.

In tune with its policy of reviewing all major projects sanctioned during the previous regime, on the ground that there were irregularities and corruption in awarding contracts, the YSRCP had terminated the contract with NECL last month and went for re-tendering.

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Single bidder

Interestingly, MEIL was the sole bidder which had filed the commercial and technical bid for the Polavaram project in the reverse tendering exercise.

The promoter of MEIL is considered close to Telangana Chief Minister K Chandrasekhar Rao. This comes in the backdrop of growing political bonhomie between the Chief Ministers of the two Telugu states.

The company is currently executing the ₹80,000 crore Kaleshwaram Lift Irrigation Project (KLIP) on Godavari River in Telangana, the flagship programme of the TRS government.

Apart from the charge of doling out political favour, two key questions emerge from the latest decision: why is the government in a hurry to finalise the new contractor when the case is still pending in the high court? Why was there no competitive bidding for the works?

“This clearly exposes the intention of the YSRCP government. It has hoodwinked the people of the state by raising the bogey of corruption in the previous deals,” senior TDP leader and former finance minister Y Ramakrishnudu said.

The opposition leaders also charged the ruling party with ‘duplicity’ and pointed out that the YSRCP leaders, while in the opposition, had made corruption allegations against the promoters of MEIL when the company was awarded contract for another irrigation project—Pattiseema—during the TDP regime.

The Andhra Pradesh High Court had on August 22 stayed the re-tendering process for the hydropower component of Polavaram project and suspended the order terminating the contract awarded to NECL.

“When the matter is still pending in the court, how can the government finalise new contract?” wondered another TDP leader and former minister D Uma Maheshwar Rao.

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Centre unhappy

The multi-purpose ₹58,000 crore Polavaram project across river Godavari, aimed at providing irrigation facility to over seven lakh acres of farmland in coastal Andhra Pradesh besides producing 960 MW power, is being undertaken as a national project and the entire cost is borne by the Centre. However, the state government is fully empowered to execute the project.

The Centre has raised objections over cancellation of the earlier contract and the re-tendering order. Union Jal Shakti minister Gajendra Singh Shekawat had said that it would delay the project. The Polavaram Project Authority (PPA), a body of experts appointed by the Centre, also voiced concerns over possible delays and escalation of costs.

The PPA did not concur with the state government’s argument that there were irregularities in the works awarded by the previous government and gave a clean chit to the NECL, causing a major embarrassment to the government.

PPA CEO RK Jain had also written to the state irrigation secretary, asking the government to stay the re-tendering process as it could lead to further escalation of costs and delay benefits accruing to the people.

However, the state government brushed aside the objections.

Further delay

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 works as per the tender guidelines.

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

After many revisions, the then TDP government had set June 2020 as the final deadline for Polavaram (irrigation component),but it will now stretch at least till November 2021 as the works, stalled for over six months now, are expected to be resumed only in November.

On August 1, the state government issued a termination notice for pre-closure of works awarded to Navayuga for execution of head works of the project. This was based on the recommendation of a high-level expert committee constituted by the government.

On August 17, fresh bids were called for the Polavaram head works (balance portion) and the hydropower project with ₹4,987 crore as the initial benchmark price.

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Massive saving

The state government has claimed that there had been a total saving of ₹780 crore following the re-tendering process.

A statement from the state irrigation department said that MEIL, the sole bidder for the project, had quoted ₹4359.11 crore for both Polavaram project head work and the hydro power project.

“This 12.6 per cent is less than the initial benchmark value of ₹4,987.55 crore for which tenders were called,” the special chief secretary (irrigation) Adityanath Das said.

He claimed that there was an additional saving of ₹152 crore in the hydel power project for which work was awarded to Navayuga earlier at an excess of 4.8 per cent of the initial benchmark value of ₹3,157 crore.

“Thus, by going in for reverse tendering, the state government has saved, in all, ₹780 crore in the Polavaram irrigation and hydro-power projects,” the official said.

The contract formalities would be completed by October 1 after a review of technical and commercial qualification of the bid.

Target TDP

“The whole process of re-tendering is a big drama and a conspiracy to defame the previous government,” the TDP leader Uma Maheshwar Rao said.

He argued that as per the government order the reverse tendering should be done only if at least two contractors participated in the bidding process. “In the case of Polavaram, only Megha Engineering filed the bids. How can the government accept the single bid?” he wondered.

The irrigation officials, however, clarified that eight parties had attended the pre-bid meeting held on September 9. Of them, only MEIL participated in the final bidding process.

Though it required two bidders to conduct reverse tender process, Megha Engineering’s bid was accepted as its bid value is less than the initial benchmark value, the irrigation official said.