South East Guwahati Water Supply Project stuck in a time warp

CAG blames it on poor planning, wrong selection of contractor and ignoring advice from JICA
By our Staff Reporter
GUWAHATI, May 6: Japan Intertiol Cooperation Agency (JICA), in all honest to goodness, did advise the Assam Urban Infrastructure Programme’s (AUIP) project director on August 14, 2012 to reconsider its decision regarding the award of contract to IVRCL Ltd whose performance had been abysmally poor in the JICA-funded water supply project in Guwahati. The AUIP, however, ignored the advice, and now South East Guwahati Water Supply Project (SEGWSP) has been stuck in a time warp!
The physical progress of only 15 per cent could be achieved in respect to package-2 and no progress in respect of package-1of SEGWSP could be achieved in over four years, and as such the possibility of completion of the project within the stipulated time is remote.
The Comptroller and Auditor General (CAG) of India, in its report on Social, General and Economic (Non-PSUs) Sectors for the year ended March 31, 2016, cited absence of proper planning and poor selection of contractors as the reasons behind this doldrums in the progress of the project work.
The Asian Development Bank (ADB) had agreed on September 2, 2011 to provide multi-trance fincing facilities to the Government of India for the purposes of fincing projects under the AUIIP. Accordingly, a loan agreement was signed on March 9, 2012 between the ADB and the Government of India. The ADB agreed to lend Rs 436.59 crore from its ordiry capital resources with the objective of improving urban services in Guwahati and Dibrugarh by way of implementation of three projects stipulated to be completed by December 31, 2017. The three projects are – (i) Water Supply (phase 1): South East Guwahati Water Supply Scheme comprising construction of water intake and water diversion structures, water treatment facilities, water transmission system and service reservoirs, (ii) draige improvement in Dibrugarh and (iii) Solid Waste Magement Infrastructure in Dibrugarh.
Of the three projects, the Government of India had taken up South East Guwahati Supply Scheme under the AUIIP to provide 24-hour potable water to the residents of Guwahati Metropolitan Area (South East Guwahati Zone). The project was to cover an area of around 71 sq. km having projected populations of 5,08,025 in 2030 and 8,04.877 in 2045. The project was divided into three packages – (i) construction of intake works, raw water rising main, water treatment plant and pure water pumping station, (ii) construction of pure water rising main, feeder mains to all storage reservoirs and pipelines, and (iii) construction of six reservoirs, including approach roads. The works of two of the three packages were awarded to the lowest bidder IVRCL Ltd, the CAG report said.
Audit observed that prior to the contract agreement in September and October 2011 made with IVRCL Ltd for package-1 and package-2, the PIU, JICA had advised the AUIP project director on August 14, 2012 to reconsider the decision regarding award of contract to IVRCL Ltd whose performance had been abysmally poor in the JICA-funded water supply project in Guwahati. However, defying the advice, the works were awarded to IVRCL Ltd that did not commence execution of works despite the issuance of several notices from the AUIIP. This led to the termition of both the packages on December 7, 2015, leading IVRCL Ltd to file a petition before the City Civil Court of Hyderabad. The court granted injunction on the encashment of the bank guarantee, and as such advances paid to the contractor could not be recovered.
The CAG report said that while works had not been re-allotted (till June 2016) even though the process for re-bidding in respect of package-2 was completed in April 2016, the process for re-bidding in respect of package-1 had not started till date (June 2016). It was also observed that the lowest bid in respect of package-2 was Rs 68.59 crore, which was 68 per cent higher than the price (Rs 40.76 crore) at which the package was allotted to IVRCL Ltd, with a likely increase of the project cost by Rs 27.83 crore, necessitating upward revision of water charges to be collected from consumers.