AP govt terminates Navayuga’s Polavaram project contract

However, Polavaram being a national project, the State government will have to get its decision ratified by the Centre to proceed further, sources in the department said.

Published: 02nd August 2019 05:35 AM  |   Last Updated: 02nd August 2019 05:36 AM   |  A+A-

A file photo of Polavaram project site in West Godavari district | Express

Express News Service

VIJAYAWADA:   On expected lines, the Water Resources Department has issued termination notice to Navayuga Engineering Company Ltd (NECL), the agency executing major works of Polavaram project, for pre-closure of contract awarded in February last year. It asked the agency to give a representation of mutual consent and gave 15 days to settle the final accounts. The department will now invite fresh bids for the remaining works of the project by ensuring ‘transparency’ in the tendering system. However, Polavaram being a national project, the State government will have to get its decision ratified by the Centre to proceed further, sources in the department said.

According to the notice served by Chief Engineer of Polavaram Irrigation Project Head Works (PIPHW) B Sudhakara Babu, termination of contract was proposed by the expert committee constituted by Chief Minister YS Jagan Mohan Reddy on June 14, after reviewing the contract and the works executed by the contracting agency. 

The committee opined that deleting part of works from Transstroy Ltd and awarding them to NECL on nomination basis by converting Engineering Procurement and Construction (EPC) contract into Lump Sum (LS) was ‘not appropriate’. Further, it expressed its view against the issue of relaxing the agreement clauses for procurement of diesel through special revolving fund and steel and cement through direct payments by the department to the suppliers. 

“In this regard, it is proposed to pre-close and terminate the above nominated LS contract for convenience as per clause 89.3 of General Conditions of Contract (GCC) of agreement and entrust the balance works to a new agency by calling for fresh tenders by ensuring transparency in the tendering system,” the notice read. 

Single contractor for irrigation, power likely

The sources said that the State government wants to amicably terminate the NECL’s contract, which was done after getting a green signal from the Centre. “So to make the exit process smooth, the government is also planning to offer compensation for losses, if at all there are any, incurred by the company,” an official noted.The notice was served on July 29, after the expert committee submitted its report to the government on July 23. In its report, the committee suggested that the government engage a single contracting agency for the balance works of both irrigation and power plant so that there will be better coordination to complete the project at the earliest.

For the record, NECL was brought on board only last year after the then State government was unhappy with the progress of works as Transstroy Ltd was embroiled in financial crisis. The State government’s decision was also approved by the Centre. the NECL was entrusted with spillway and spill channel works worth `1,244.35 crore, besides additional works of balance works in spillway, spill channel and hydel power house foundations for `918.76 crore. In addition to the above, the agency was also awarded works of main dam package -- cofferdams, Earth-Cum-Rock Fill (ECRF) dam (gap-1), approach channel and others -- for `751.55 crore.

The Polavaram project had raised a political storm in the State with the YSRC, while in Opposition, levelling allegations of large scale corruption in executing the project by the previous TDP regime. 
After the TDP pulled out of the NDA government in the run up to the 2019 elections, the BJP lashed out at the TDP for ‘making money’ out of the project. During one of his visits to AP as part of election campaign, Prime Minister Narendra Modi went to the extent of saying that the TDP was using Polavaram like an ATM to draw money from the Centre. 

Objective of project
Polavaram project is envisaged to irrigate 2.91 lakh hectares of land, generate 960 MW of power and meet the drinking water needs of more than 500 villages, besides industrial requirements of the State


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