SNC-Lavalin case: A deal mired in controversy right from day one

From the very start, the move to renovate the Pallivasal, Panniar and Sengulam hydro-electric projects had been a problematic one.

Published: 24th August 2017 01:37 AM  |   Last Updated: 24th August 2017 11:19 AM   |  A+A-

By Express News Service

THIRUVANANTHAPURAM: From the very start, the move to renovate the Pallivasal, Panniar and Sengulam hydro-electric projects had been a problematic one. The Central Electricity Authority (CEA) itself had shot down a Kerala State Electricity Board (KSEB) proposal in this regard.

The CEA rationale was the projects were more or less healthy. What the Central agency recommended instead was a ‘capacity augmentation’ to keep them going. That was in 1992. The oldest of the three projects was the 37.5-MW Pallivasal, incidentally the state’s first power project. The KSEB, however, chose to ignore the CEA advice and went ahead with the deal.

In 1995, the Congress Government in the state signed an MoU with Canadian company SNC-Lavalin for a JV for the project. The very next year, it mutated into a consultancy contract. G Karthikeyan was Electricity Minister then and R Sivadasan, the second accused in the case, the KSEB chairman.

In October 1996  (the Left Government assumed office in May that year) Chief Minister E K Nayanar and Electricity Minister Pinarayi Vijayan flew to Canada for talks with SNC-Lavalin. The next year, the consultancy agreement was converted into a fixed price contract. Under it, SNC-Lavalin would supply equipment for the renovation.

The KSEB board approved the deal in January 1998, and the Cabinet, two months later.  Pinarayi Vijayan -  the scandal had always proven to be the proverbial sword of Damocles dangling over his political career - justified the deal pointing to the Malabar Cancer Centre. The hospital was to have cost Rs 103.3 crore, of which Lavalin’s share would be Rs 98.3 crore. But that money never materialised in full. There were ample warnings even otherwise.

For instance, the E Balanandan Committee had advised it would be financially pragmatic to hand over the project to BHEL. That too had been ignored.  In 2001, an Assembly subject committee concluded the state had lost out massively in the deal. In 2002, the Congress Government ordered a Vigilance probe. The CAG report for the year ended March 2005 found the Rs 374.5 crore deal did not yield ‘’commensurate gains’’ for Kerala.

In 2006, the Oommen Chandy Government decided to hand over the case to the CBI.  The next year, the High Court ordered a CBI probe. In 2009, Pinarayi Vijayan was named the ninth accused in the case, leading to more bitter battles outside and within the court and within the CPM itself.


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