CAG report exposes irregularities in AP irrigation projects

The Comptroller and Auditor General (CAG) has exposed gross irregularities in the execution of Andhra Pradesh's irrigation projects, which has resulted in a cost overrun of Rs 52,116 crore.

The report, prepared by Principal Accountant General Vani Sriram, was tabled in the Andhra Pradesh Legislative Assembly on the last day of the Budget session here today.

Lack of planning, delay in land acquisition, delay in completing projects, besides changes in specifications and scope of works, pushed up cost of projects by Rs 52,116 crore as on September 2012, the latest CAG report on the 'Jalayagnam' irrigation programme said.

The CAG report comes in the wake of opposition parties claiming that the 'Jalayagnam' programme launched in 2004 by late Andhra Pradesh Chief Minister Y S Rajasekhara Reddy was a money-spinner for Congress leaders and some contractors.

Involving 86 major irrigation projects at a cost of over Rs 1.86 lakh crore, the programme was supposed to create new irrigation potential for 97.46 lakh acres, besides stabilising the existing irrigated area of 22.53 lakh acres.

The state government claimed to have spent a whopping Rs 80,000 crore so far on these projects since 2004-05 but so far only 13 projects have been completed, creating a newly irrigated area of 1.37 lakh acres, besides stabilising 1.89 lakh acres.

However, CAG has estimated that due to some partially completed projects along with those fully completed, the new irrigated area till September 2012 is 12.74 lakh acres.

The CAG came down heavily on the Andhra Pradesh government for taking up major irrigation projects "without adequate planning" and clearances from different agencies like Central Water Commission, Planning Commission as well as Ministry of Environment and Forests. 

Almost all contracts were awarded without obtaining necessary clearances like investment clearance (24 projects) from the Planning Commission, forest clearance (21 projects), environmental clearance (18 projects) from the Ministry of Environment and Forests. This also included in-principle clearance from the Central Water Commission (16 projects) as well as rehabilitation and resettlement clearance (14 projects) from the Ministry of Tribal Affairs, the CAG report said.

About 11 projects were taken up without preparation of detailed project reports, while four were launched without conducting feasibility studies, the CAG observed.

Financial interests of the state were not safeguarded as the tendering and contracting process lacked transparency under the engineering, procurement and construction (EPC) mode adopted by the government, it said.

"In many test-checked cases, the internal benchmark estimates were inflated to the extent of Rs 3,129.52 crore," the CAG report said.

Citing the case of the Pranahita-Chevella Lift Irrigation project as an example where contracts were awarded without preparing a detailed project report, the CAG report said that the project cost, which was originally estimated to be Rs 17,875 crore in May 2007, had doubled to Rs 38,500 crore in December 2008.

"All works relating to the project were awarded between May 2008 and May 2009, while the detailed project report was submitted in April 2010. There was a mismatch between the time stipulated for completion of the project as per the agreements and the detailed project report," the report said.

Interestingly, for the past six years, the AP government had been lobbying with the Centre to secure "national project" status for the Pranahita-Chevella project, but to no avail. 

In 36 packages related to 15 projects, it was found that works worth Rs 7,856 crore were awarded to single bidders.

In the case of 52 packages pertaining to 15 other projects, competition was very low with merely two bidders, while the value of contracts entrusted was Rs 34,169.49 crore, the CAG report said.

Audit scrutiny of mobilisation advances paid to contractors for eight projects revealed many deficiencies, including incorrect payment of advances of Rs 111.84 crore and loss of revenue of Rs 33.07 crore due to incorrect stipulation of interest rate.

Of the total sum of Rs 3,627 crore distributed to contractors in the form of mobilisation advances for 349 works, the state government is yet to recover more than Rs 1,100 crore, because the stipulated 10 per cent work has not been completed, the CAG said.

In the case of the Pranahita-Chevella project alone, a sum of Rs 354 crore was paid as mobilisation advance, but has not been recovered so far, it added.