Yettinahole project: CAG flags delays, financial uncertainty, tender deviations

Bengaluru: The Yettinahole drinking water project faces “financial uncertainty” over how the government will raise nearly Rs 8,000 crore required to complete works, the Comptroller & Auditor General (CAG) said with scathing observations Thursday.

The CAG report, tabled in the Karnataka Assembly, found “deficiencies” and “deviations” in the tender process, leading to “undue benefit” to contractors. The audit spanned 2012-13 to 2022-23.

The project aims to draw 24 tmc ft water from the Yettinahole river in Sakaleshpur to meet the drinking water demands of Kolar, Chikkaballapur, Tumakuru, Ramanagara districts and some parts of Bengaluru.

First approved in 2012, when the BJP was in power, the project cost was estimated at Rs 8,323 crore. In 2014, it was revised to Rs 12,912.36 crore after the Congress came to power. In January 2023, the cost was again revised to Rs 23,251.66 crore.

“...the Visvesvaraya Jala Nigam Ltd (VJNL) requires a balance amount of Rs 7,954.63 crore for completion of the project,” the CAG said, adding that banks have refused to fund the project further as VJNL was not generating any revenue and depended on government grants for repayment.

The VJNL has proposed availing long-term loans guaranteed by the government. However, the government has not taken any decision. “As a result, the VJNL faces a shortage of Rs 7,954.63 crore as of March 2024 to complete the project,” the audit said. “As such, there is a lack of clarity on the source of funds to finance the balance works of the project.”

The project is “far from completion and intended benefit delivery”, the audit found. “...despite a very large expenditure of Rs 15,297 crore over 12 years, the envisaged objective of providing drinking water to Chikballapur and Kolar districts remained unattained,” it said.

Due to “non-synchronisation” of works, assets created at a cost of Rs 2,965.77 crore “were lying idle and could not be used”, the audit found.

According to the CAG, 80% of works (out of 55) were awarded to contractors without evaluating their financial capability and work experience. The audit also found that 29 out of 43 works (67%) costing Rs 14,805.80 crore were awarded to only seven contractors. One contractor got 11 contracts worth Rs 5,215.58 crore.

The CAG urged the VJNL to work in a “mission mode” to stick to the November 2026 deadline to complete the project.