Port projects raise a stink in Odisha

Taking advantage of the state’s 480 km long vast coastline, the Naveen Patnaik led Biju Janata Dal (BJD) government in Odisha had an ambitious plan to implement port projects in different coastal districts under PPP (public-private-partnership) mode.

 The plan, however, has run into trouble with the Congress, the principal opposition party in the state, alleging a scam in it. While trying to corner the government on the issue, the party has also demanded that the agreements signed between the state and different private sector companies for the implementation of the port projects be scrapped immediately.  What has added to the woes of the state administration is the adverse remarks made on the issue by the Comptroller and Auditor General (CAG) in its latest report.

The CAG report was tabled in the state Assembly during the recently concluded winter session of the house.
The Congress has raised its objections to the manner in which the state government decided to adopt the MOU (Memorandum of Understanding) route to implement the projects instead of an international competitive bidding process — a far more transparent and fair way of execution of such high valued projects. The CAG has also raised this point in its report. The cost of each of the port projects exceeds Rs 500 crore.

In the eye of a storm

The government had decided to implement four out of five port projects through the MOU method. The four projects are - Astaranga, Chudamani, Dhamara and Subarnarekha. Gapalpur was the only project for which the international bidding route had been adopted. That project was also in the eye of a storm as the company which was awarded the project reportedly had no previous port building experience.

Interestingly, two government departments -- finance and law -- were reportedly in favour of international bidding process for at least some of the port projects. However, their suggestions were sidelined during the final decision making.

This has provided enough fodder to the opposition parties and the critics of the Patnaik administration to suggest that the government’s decision was influenced by vested interests who were against international bidding process. The CAG in its report had also pointed out that there were deficiencies in concession agreements signed between the state government and the port developers.

According to the Central auditor, longer concession periods were allowed than what is prescribed in model concession agreements (MCAs).

While MCA had prescribed that the concession period should normally be 30 years, at least three ports were allowed concession period of 34 years. This move on part of the state government ensured loss to its exchequer upto about Rs 160 crore. The Congress leaders, however, do not agree.

According to them, the ‘presumptive loss’ over a period of 30 years because of lack of international competitive bidding as well as faulty concession agreement could be to the tune of more than Rs 4 lakh crore to state exchequer. In fact, some of the Congress leaders have already questioned the CAG’s decision not to calculate the presumptive loss in this case.

The state government as well as BJD leaders have strongly rejected the Congress’ allegations and insisted that the government had not done anything illegal by adopting the MOU process to implement the projects. According to them, the government’s port policy clearly states that either the MOU route or international competitive bidding can be adopted. The same MOU process have also been adopted by some other states who have implemented the port projects in PPP mode.

But the Congress seems to be determined to keep the issue in the limelight and make it a major political plank during the coming assembly and Lok Sabha elections and urban local bodies polls which are not far away. This was clearly evident in the manner in which the Congress legislators created a pandemonium in the house during the recently concluded winter session when Speaker Pradip Amat rejected their demand for a detailed discussion on the issue.

The Speaker did not allow the debate on the ground that the matter was sub-judice. A petition challenging the state government’s port police in pending in the court. Some of the port projects are also facing resistance from the local people. A case in point is the project at Astaranga in coastal Puri district where the local villagers had staged a demonstration a few days back against the implementation of the project.