In a major setback for the Jagan Mohan Reddy government, the Andhra Pradesh High Court on Thursday (August 22) stayed the re-tendering process for Polavaram irrigation project and suspended the order terminating the contract awarded to Navayuga Engineering Company Limited (NECL).
Finding fault with the government order prematurely cancelling the contract and going in for fresh tenders, the court directed that the works be restored to NECL, which has to complete the works before the June 2021 deadline.
However, the court order pertains only to the power project component, worth ₹3,100 crore, but not the head works and other related works of the irrigation project. The company will have to move the court on the irrigation works separately.
On August 14, the Andhra Pradesh Power Generation Corporation (APGENCO) issued orders, following directions from the government, cancelling the contract which was awarded during the previous Telugu Desam Party (TDP) regime.
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The YSR Congress Party government has been alleging that there were large scale irregularities and corruption in awarding the contracts to NECL.
The total value of the contract was estimated at ₹4,970 crore, including ₹1,870 for project head works and ₹3,100 crore for the hydropower project. NECL had bagged the contract in 2017 when TDP chief N Chandrababu Naidu was the chief minister.
The company had moved the high court challenging the termination of contract.
Senior advocate G Subba Rao, appearing for NECL, submitted to the court that the company had not violated any norms in obtaining tenders from the government. With regard to the power project, the company had blamed it on APGENCO for the delay in commencement of the work.
“Despite repeated reminders, APGENCO authorities had not handed over the power project site. Though we told the government that we had already spent ₹398 crore towards turbines, generators and other electro-mechanical works, besides advance payments to sub-contractors, the government unilaterally cancelled our contract,” the company argued.
NECL said that the sudden pre-closure of tenders without showing any valid reason would not only cause huge financial loss to the company, but also damage its reputation across the country. “We have time up to November 20, 2021 to complete the hydro power project,” he said.
Further, the company assured that it was ready to complete the project ahead of the schedule.
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The state government contended that it was within its purview to revise the tender and go in for a new one. However, the court stayed the operation of the government order.
The multi-purpose ₹58,000 crore Polavaram project across river Godavari, which aimed at providing irrigation facility to over seven lakh acres of farm land in coastal Andhra 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 re-tendering order of the state government did not find backing from the Centre and 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 recently wrote to the State Irrigation Secretary, directing the government to stay the re-tendering process as it could lead to further escalation of costs and delay benefits accruing to the people.
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“There is neither enough ground nor any necessity for pre-closure of tenders and re-tendering of project works. Such a decision will plunge the project into uncertainty,” Jain had said in his letter.
TDP supremo Chandrababu Naidu said that the PPA’s conclusion was a vindication of his government’s decision to award the sub-contract to NECL. He claimed that all sorts of misinformation were spread about the TDP’s role in Polavaram project and charges were levelled against him and his party without any evidence.
“The YSR Congress government does not know and does not care to listen to others who are more knowledgeable. Its foolish and vindictive actions will have an adverse impact on the state’s future and the progress of crucial projects like Polavaram,” Naidu had tweeted.
However, an eight-member technical committee, appointed by the Jagan government, found alleged corruption in the execution of project works during the TDP regime.
There were irregularities in the tendering process for engineering, procurement and construction works, and NECL was paid ₹3,128 crore in violation of the prescribed norms, the committee said in its report.
Therefore, Jagan and his party colleagues had argued that re-tendering was absolutely necessary.