GMDA allowed GIL to mint money: CAG

What makes South Guwahati West Water Supply Project to be in the doldrums?

By our Staff Reporter

GUWAHATI, April 28: What has made the South Guwahati West Water Supply Project (SGWWSP) under the Jawharlal Nehru tiol Urban Renewal Mission (JNNURM) to be in the doldrums? The project work that was stipulated to be completed within 30 months i.e. by September 2011 is still to be commissioned even after 97 months! This is not all. GMDA, not evaluating rates of prices of pipes quoted by the contractor, has allowed the latter to mint money in the purchase of pipes.

South Guwahati West Water Supply Project (SWWWSP) is one of the three new water supply projects in Guwahati to provide safe potable water and cater to the increasing water demands of the growing population in the city. The other two projects are – South Central and North Guwahati Water Supply Project under Japan Intertiol Cooperation Agency (JICA) and South East Guwahati Water Supply Project (SEGWSP) under Asian Development Bank (ADB).

According to the report of the CAG on social, general and economic (non-PSUs) sectors for the year ended March 31, 2016, everything in the project was out of line right from tendering. The chronology of events of the project, according to the CAG report, is: the Union Ministry of Rural Development (MoUD) sanctioned Rs 252.85 crore in March 2008. The amount is 90 per cent of the total project cost of Rs 280.94 crore under JNNURM for the construction of SGWWSP. On receipt of the fund, Guwahati Development Department (GDD) accorded administrative approval of Rs 280.94 crore on December 18, 2008. The project was allotted to Gamon India Ltd (GIL) at a contract price of Rs 349.70 crore on turnkey basis. The contract agreement, which included the payment break-up, schedule was executed on March 24, 2009 with GIL with the stipulation to complete the work within 30 months, i.e. September 2011. On the basis of the contract price, GDD accorded revised administrative approval of Rs 355.31 crore on December 5, 2009. The project could not be completed within the stipulated time, and it was extended to December 2015, needing a revised administrative approval of Rs 389.53 crore, including the cost of engagement of project magement consultant (PMC) and clearance costs towards other agencies like Railway, Assam Power Distribution Company Ltd (APDCL) etc., was accorded in February, 2016. Surprisingly, no rescheduled target for the completion of the project was fixed till June 2016. According to the CAG, till June 2016 92.64 per cent physical progress of the project could be achieved after 97 months of commencement of the project.

The process of tendering was a real hell of a mess. The GMDA invited notice inviting tenders of the work on turnkey basis on June 27, 2008 as per cost of the DPR at Rs 280.94 crore. Accordingly, on the basis of the DPR cost, fincial bid was evaluated and the work was awarded to GIL at a tender value of Rs 349.70 crore on February 18, 2009. It was, however, seen from the DPR that the cost of 280.94 crore was derived on the basis of component-wise estimated cost of each item, including 3 per cent contingency of Rs 8.14 crore and 0.5 per cent administrative charges of Rs 1.36 crore. After exclusion of the contingency and administrative charges from the DPR cost, the actual project worked out to Rs 271.44 crore (Rs 280.94 crore –Rs 9.50 crore). The GMDA, however, invited tenders for Rs 280.94 crore, instead of the actual project cost of Rs 271.44 crore, inflating the tender by Rs 9.50 crore.

Out of the actual project cost of Rs 271.44 crore, a provision of Rs 185.65 crore was made in the DPR towards the cost of pipes of different specifications. GIL was not a manufacturer of pipes, as such after receipt of the work order it made purchase agreements with different pipe manufacturing companies for the supply of ductile iron (DI) and mild steel (MS) pipes. Audit observed that GIL procured pipes from manufacturing companies at 64 to 195 per cent lower rates from the rates allowed to GIL as per DPR by the GMDA. GIL had procured 4,64,710 RM pipes from manufacturing companies at the cost of Rs 99.51 crore against which GMDA had made payment of Rs 204.65 crore to GIL as per contract rates. While awarding the project on turkey basis the item-wise rates quoted by the contractor should have been evaluated with reference to the rates of the pipe manufacturing companies, as the major expenditure of the project was to be incurred on pipes.