Naidu government had awarded the project without open bids.
Hyderabad: In yet another decision that is likely to affect the interests of the infrastructure companies roped in by the previous Telugu Desam Party regime, Andhra Pradesh Chief Minister Y.S. Jagan Mohan Reddy has sacked M/s Navayuga constructions and M/s Bekem Infra Private Limited from the ongoing Polavaram multipurpose irrigation project across Godavari River and called for fresh tenders.
Both companies are based out of Hyderabad and have spread their activities all over the world with multibillion US dollars. They were awarded Polavaram project works by the Chandrababu Naidu government two years ago on nominations basis—in other words, works worth Rs 3,301 crore were given to these two firms without calling for open bids.
CM Jagan after coming to power has set up a high-level committee to probe the corruption and misdeeds in the Polavaram project, perhaps the largest irrigation dam in the country. Jagan during his days in Opposition had alleged that the Naidu government was handing over its works to selected firms close to ruling party leaders.
The committee submitted its interim report to the government last week, based on which it was established that the awarding of works to Navayuga and Bkem companies was in violation of the tender process and there were irregularities of around Rs 2,300 crore in the process. Based on this, the irrigation department has served notices to both the firms on 1 August.
Polavaram project, which is underway with an estimated cost of around Rs 55,000 crore is a Central-funded project for Andhra Pradesh, as per a promise made by the AP Reorganisation Act at the time of the bifurcation of the state in 2014. Under the assurance, the project would be monitored and funded by the Centre but executed by the state government. So, it is a joint concern of the Centre and the state.
Initially, the project was given to Transstroy, another Andhra based company, but the Chandrababu Naidu government sacked it on the complaint that works were not progressing as per the agreement. Union Water Resources Minister Nitin Gadkari at the time tried to defend Transstroy, but then CM Naidu insisted on replacing Transstroy with Navayuga. The high-level committee has found that the works were given to Navayuga and Bekem firms on a “lumpsum” method, in which they would be provided with mobilisation advances too, to take up the works. These two firms were given an opportunity to draw money from the government for diesel, steel and cement at the prevailing market rates. The committee declared it as illegal.
Of the two firms, Navayuga is currently doing works worth around Rs 3,000 crore while Bekem Infra another Rs 300 crore. In the notices issued to these firms, the AP irrigation chief engineer has suggested that the termination of the contracts can be carried out through mutual agreement, so that they would get a chance to participate in fresh tenders.
It is not clear whether the two firms would be participating in the fresh round of tenders—through a procedure called reverse tendering—meaning whoever is ready to complete the work at a lower cost would bag the contracts. The representatives of both the companies have refused to comment on the termination notices. Sources in the irrigation department said that the Centre, which is observing developments on Polavaram project, might step in to find out the reasons for the termination of contracts of these two firms. The details of the committee would have to be shared with the Centre, they added.
The cancellation of the work of these two infra giants and commencement of fresh tenders underway might delay the project and, thus, lead to escalation of the total cost—from Rs 55,000 crore. As per the experts in the irrigation department, any delay might lead to a cost escalation by around Rs 2,000 crore, thus defeating the purpose of the government to save money on it.
The Centre is equally concerned about some of the policies of the Jagan government in the last two months like reviewing of PPAs (power purchase agreements) of renewable power projects, cancellation of tenders of irrigation works and making it compulsory for the private sector to recruit at least 75% of locals in their jobs as they might affect the confidence of private sector.