‘Reverse tendering will escalate cost of Polavaram project’

The ministry sought a report from the PPA after the Andhra Pradesh government issued termination notices to the contracting agencies last month.

Published: 24th August 2019 08:27 AM  |   Last Updated: 24th August 2019 08:27 AM   |  A+A-

Polavaram Irrigation Project

Polavaram Irrigation Project

By Express News Service

VIJAYAWADA:   Highlighting the implications of the State government’s decision to go for reverse tendering, the Polavaram Project Authority (PPA) submitted a report on the national project to the Union Ministry of Water Resources on Friday. Besides cautioning that there would be legal impediments if the State goes ahead with retendering, the PPA also informed the Union ministry that there was no guarantee that the cost of the project would come down through reverse bidding. 

The ministry sought a report from the PPA after the Andhra Pradesh government issued termination notices to the contracting agencies last month.Sources told TNIE that the PPA also apprised the ministry of the potential issue of accountability. The PPA said that defect liability of the project may become an issue, if there is a change in contracting agency, resulting in lesser accountability, they added.

Defect liability is the period in which the contractor will be liable under the contract for any defects in the project. Citing the example of four-year delay in identifying the contractor between 2009 and 2013, the PPA felt that the process of engagement of a new agency would take time. 

“The move will delay the project and result in increase of project cost. It will also affect the efficiency of the officers. In 2009, there was a delay in finalisation of tenders and the present situation may also lead to the same,” a top-ranking official told TNIE. 

Identifying contractor may escalate cost: PPA

A copy of the report was also sent to the State Water Resources department. Identifying a new contractor may also lead to cost escalation due to the change in execution prices, the PPA observed. “And if there are any compensations to be paid to the contractors, the PPA felt that it would add to the burden,” the official noted.

The PPA also told the ministry that there was neither enough ground nor necessity to terminate the earlier contract. It also noted that the same was informed to the State government, which subsequently decided to proceed with retendering. Another important issue the PPA mentioned in the report was the pending approvals for the designs of the main dam. “The critical main dam designs are pending for approval. Even if the government wants to resume work by November, it can’t be done,” the official observed.

For the record, the Water Resources department, on July 29, served termination notices on Navayuga Engineering Company Ltd (NECL) and Bekem Infra Pvt Ltd. Union Jal Shakti Minister Gajendra Singh Shekhawat, on August 2, said that the move would delay the project, and directed his department to review the situation. The PPA held an emergency meeting on August 13 to take stock of the State’s decision. 

Later, Chief Executive Officer of PPA RK Jain, in a letter dated August 16, had advised the State government to abandon the idea of pre-closure of contract as it could lead to additional financial burden and also delay the reach of project benefits to the stakeholders. Ignoring the advisory, the State government issued a notification inviting tenders for both irrigation and hydel power plant works on August 17. 

Subsequently, Special Chief Secretary (Water Resources) Adityanath Das wrote a letter to Jain on August 19 stating that the retendering process would bring down the project cost and would not result in any delay. He also informed the PPA that the decision to terminate the earlier contracts was taken after an expert committee, constituted to review the national project, recommended retendering due to lapses in contractual agreement. 

While the NECL and Bekem Infra gave their consent for termination of the contract for executing the irrigation component, the NECL moved court against termination of 960 MW hydel power plant contract as there was a clause for arbitration in the project agreement. The court, in its interim order, suspended the government’s decision. With the stay, the reverse bidding for the project, scheduled to commence on August 22, hasn’t begun yet. The PPA, however, said it had submitted a report only on the issues related to the irrigation works.


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