BHUBANESWAR: The Comptroller and Auditor General (CAG) has objected to payment of over Rs 90 crore to contractors towards price escalation by the Water Resources department in contravention of the order of the Orissa High Court. The deviation was noticed during an audit of the Mega Lift Project Division of the Water Resources department, which implemented 48 mega lift projects under four clusters with an estimated cost of Rs 1,631.65 crore from December 2015 to December 2016.
The audit during scrutiny of the tenders of the 48 projects noticed that of the four clusters, the mega lift projects of two clusters were awarded in December 2016 even after the office memorandum of December 2012 incorporated a clause for payment or recovery of money from the contractors for price variation was challenged in the High Court in September 2016. Executive engineers of the Mega Lift Project Division had already made a payment of Rs 1,431.88 crore to the contractors by January 2020.
Audit scrutiny revealed that a sum of Rs 90.12 crore had been paid to the contractors towards price variation on the basis of the office memorandum of December 2012. “Since all the works were executed prior to the issue of fresh circular in November 2019, payment of Rs 90.12 crore towards escalation as per December 2012 circular which had been quashed by the High Court in May 2018 was in contravention of the Court orders and needed recovery,” the report said. In its compliance report in August 2021, the State government said the department had paid price escalation as per the conditions of a contract before the pronouncement of the verdict of the High Court on May 7, 2018.
The reply of the government is not based on facts as out of the sum of Rs 90.12 crore paid to contractors, Rs 13.37 crore was paid towards price variation before May 2018 while the December 2012 circular was under challenge and Rs 76.75 crore was paid after the High Court judgement in May 2018 is in violation of the court order, the audit said.
However, the audit noticed that the government issued another circular on November 19, 2019, for incorporating price adjustment claims in the tender agreement from the date of issue of this circular which was further amended on June 7, 2021 to give effect retrospectively for the period from July 7, 2012 to November 18, 2019.