AP Govt to scrap all irrigation contracts

Hyderabad: The Andhra Pradesh government is understood to have decided to cancel all contracts awarded for various irrigation works that have failed to take off even after several years. Instead, it has decided to call fresh tenders to take up the works.

As part of the decision, the government is likely to cancel irrigation contracts worth Rs 5,000 crore in the first phase pertaining to various works including Polavaram left and right canals. Chief Minister N Chandrababu Naidu called for bringing these two canals under operation by linking Godavari and Krishna rivers, pending the completion of the Polavaram project.

What is more interesting is that the AP government is planning to do away with the Engineering, Procurement and Construction (EPC) system in awarding fresh contracts. Instead, it is likely to award tenders on item rate system which would save a lot of tax payers' money.

Sources said the Chief Minister, during his recent review of the progress of various irrigation projects, was told that there was inordinate delay in execution of various projects due to delay in land acquisition, lack of adequate budgetary allocations and red-tapism in granting design approvals. This has resulted in the contractors virtually stopping the works and demanding an abnormal escalation in costs.

The irrigation officials reportedly brought to the notice of the government that paying escalation costs to the irrigation contractors would only lead to a lot of controversies, including allegations of financial mismanagement, besides wasting public money worth thousands of crores of rupees.

Instead, it would be better to cancel all the delayed contracts pertaining to various irrigation projects, return bank guarantees to the contractors and obtain no-claim certificates from them. 'This would help the government save a lot of public money,' sources said.

The AP government is of the view that if the fresh negotiations are held with the contractors on price escalation, it would set a bad precedent and would help unscrupulous and dishonest contractors, denying opportunities to the sincere ones.

'In future, there is every possibility that bidders would quote lower rates initially to bag the contracts and seek cost escalation after a few years on the pretext of delay in execution of works. Thus, they can get away with huge profits, which will only make public tender process irrelevant,' sources said.

The Congress government in the erstwhile combined Andhra Pradesh under the leadership of YS Rajasekhara Reddy has taken up Jalayagnam, construction of irrigation projects on a mass scale. The programme comprised 86 projects (44 major, 30 medium, 4 flood banks and 8 modernization works) and was estimated to cost Rs 1.86 lakh crore.

Twelve of these projects were taken up prior to 2004-05 (approved cost Rs 2,139 crore) and were brought under Jalayagnam to expedite their completion. As many as 74 projects were sanctioned between 2004-05 and 2008-09 (approved cost Rs 1,83,470 crore).

The programme was aimed at developing infrastructure for irrigation, mainly in the backward, parched and drought prone areas of Telangana and Rayalaseema regions of the State, to create an ayacut of 97.46 lakh acres and stabilize the existing ayacut of 22.53 lakh acres.

According to officials, about 50 per cent of the works were done in both Telangana and Andhra Pradesh and the remaining works were still in various stages. The works were delayed due to delay in land acquisition, lack of funds and red-tapism in giving approvals to the designs.

This has led to escalation of price of the tender casting tremendous burden on the exchequer. Sources said the EPC system had given scope to mischievous contractors to play games with the government.

They claim lowest prices and secure the tender only to delay the works, to escalate the charges and to claim more from the government. Irrigation experts feel that this would be an eye opener for the State and Central government of the future.

'The government must learn that the EPC system was not good if the detailed investigation report - DPR is not prepared before the invitation of tenders. It would be a big loss of public money if the tenders are called without land acquisition, budgetary provisions which would lead to litigations, extra costs and delays.

Calling tenders just for popularity would be dangerous and affect the economy in the long run,' irrigation experts said. The example that the erstwhile combined AP government has finalized tenders worth Rs one lakh crores for execution in four years with a budgetary allocation of Rs 10,000 shows lack of rationality in implementing the construction works.