CAG says T-Hub irregularities cost Telangana government Rs 16.7 crore

CAG report stated that procedures were not followed in the selection of consultants for T-Hub and IMAGE Tower.

HYDERABAD: Comptroller and Auditor General of India (CAG) in its report on state finances for the financial year 2016-17 stated that irregularities in selection of consultants for construction of phase-2 work of T-Hub and Innovation in Multimedia, Animation, Gaming and Entertainment (IMAGE) tower had led to extra financial burden of Rs 16.7 crore on the exchequer. “Constructing agency of T-Hub phase II received undue benefit of Rs 13.11 crore during execution, due to post agreement changes. The matter needs to be investigated,” it said.

According to the CAG report, change in payment clause with the consultant while concluding the agreement resulted in additional financial commitment of Rs 5.04 crore in IMAGE Tower.
Claiming that prescribed procedures were not followed in the selection of consultants for T-Hub and IMAGE Tower, the CAG said that the Telangana State Industrial Infrastructure Corporation (TSIIC) had closed the contract of an existing consultant for IMAGE Tower for reasons not on record and appointed a new consultant. This resulted in extra commitment of Rs 15.14 crore.

“The indicated that the entire process of selection of Consultant Architects for T-Hub and IMAGE towers was irregular and violative of manual provisions. The tender process lacked transparency and fairness,” the CAG observed.

“Financial bid of W Design Studio Pvt Ltd, which secured 71 marks in technical evaluation, was opened, while financial bids of two other firms, which secured higher (75) marks were not opened. The TSIIC replied that firms which scored 75 marks or more were shortlisted and W Design Studio Pvt Ltd was given exemption based on the services rendered for setting up T-Hub in IIITH.

The reply was not acceptable as (i) financial bids of all firms which secured more (75) marks were not opened for reasons not on record (ii) opening the financial bid of a firm without getting minimum marks in technical evaluation, gives scope to favoritism, and (iii) appointment of Design Studio Private Limited in setting up T-Hub in Phase I itself was without tenders,” the report explained.

No monitoring of land used by IT firms
Informing that Telangana accounted for around 13 per cent (Rs 40,000 crore) of total software exports from the country, the CAG found that the IT department had not monitored development of infrastructure by IT firms in respect of land already allotted. For instance, Infosys Technologies Limited did not take up development in 296 acres (Phase II and III) out of 446 acres of land allotted in May 2007. Wipro utilised only 9 out of 101.03 acres of land at Gopanapally allotted in June 2007, leaving 92 acres of the land idle without any development.

ITIR remains a non-starter
As planning for Information Technology Investment Region (ITIR) was deficient, the ITIR remained a non-starter in Hyderabad, the CAG said. According to the report, the State government had replied in November 2017 that formation of the functional authority for ITIR got delayed due to delay in implementation of GoI projects. “The reply was not acceptable as the State government was to play a lead role as per the ITIR policy. The support from GoI was only for two projects with Rs 165 crore as against Rs 4,518 crore required for infrastructure.

CAG Findings
Firms were not interested as land parcels offered by ITE&C department lacked basic amenities
No land allotments in last five years
The dept allotted 101.03 acres of land to a firm. Of this, 49.61 acres were mired in environmental issues, but officials did not take any action
There was persistent mismatch between budget allocations and expenditure under “subsidies” head
Govt should have reviewed investment projections after formation of Telangana
The dept still to make provision of State Wide Area Network facilities to newly-formed districts

Fab City promoters failed
Two firms, which were to play key role in development of semi-conductor industry in Fab City project failed to promote the industry. Consequently, out of 1,075 acres earmarked to Fab City, 712 acres remained unutilised. IT department or TSIIC did not ensure minimum contribution from constituent units as per Electronic Manufacture Cluster Scheme guidelines, the CAG observed.