CAG reports that Polavaram by mid-2019 may not possible

In an embarrassment to the State government, the Comptroller and Auditor General’s (CAG) report, tabled in the State Assembly on Wednesday, felt the possibility of the completion of Polavaram project by June 2019 “appears improbable” due to the water resources department’s inability to enforce contract conditions, improper planning and delays in finalisation of designs, land acquisition and relief and rehabilitation measures.

The CAG conducted the performance audit between May and August 2017, and as such, the report is not exactly a reflection of the present status of the project. Nonetheless, its conclusions are irksome for the government that has been seeking to expedite Polavaram.

Significantly, the auditor found that non-submission of details of expenditure incurred on land acquisition and relief and rehabilitation led to the non-disbursal of `1,407.64 crore by the Centre to the State. The submission of utilisation certificates being a bone of contention between the two sides, this assumes significance as it appears to vindicate the stand of the Centre that the State has not been submitting utilisation certificates.

As per the report, the State government spent `6,598.70 crore between April 2014 and July 2017 on the irrigation component of the project and received `3,349.70 crore as reimbursement.It noted that the reasons for the Centre to reimburse only `3,349.70 crore were not on record. Besides this, the water resources department had not submitted details of expenditure of `1,407.64 crore to the Polavaram Project Authority (PPA), the CAG said, pointing out that the State does not have a system to promptly capture, classify, consolidate and report the expenditure on land acquisition and R&R.

The CAG also brought to light the fact that the State government and the Centre had not signed a memorandum of understanding regarding procedure for release of funds. It observed that the two sides did not lay down procedures to be followed for submission of claims to the PPA and the methodology for checking the claims and reimbursement. 

‘Land acquisition for Polavaram delayed’

The reasons for not signing the MoU were not evident from records, it added.Commenting that delay in finalisation of designs, land acquisition and R&R led to cost escalation, the auditor said as of March 2017, only 4,069 out of 1,05,601 project displaced families (PDFs) had been identified for rehabilitation. In other words, it said 96 per cent of PDFs were yet to be rehabilitated as of March 2017. Interestingly, it noted that relevant records/information relating to implementation of R&R had not been submitted for audit.

The government in reply to the auditor’s questions in this regard explained that R&R action plans were prepared to be implemented in four phases simultaneously with the progress of works and that at the time, PDFs in 14 habitations had been rehabilitated under Phase-I. However, the CAG opined that the reply was contrary to the fact that the progress of R&R was not in line with progress of works. The department could relocate only 15 out of 371 villages in 12 years, it said, and highlighted that delay in relocation of villages in a timely manner led to increase in cost by Rs 1,331.91 crore. Its reasoning for the same being that the State government had to revise the agreement for execution of spillway, earth-cum-rock fill dam and other works with the contractor from the original Rs 4,054 crore to Rs 5,385.91 crore after the contractor showed poor progress of work citing the delay in land acquisition and R&R in eight villages in the dam area. The contractor sought revision of rates to 2015-16 level from the original agreement inked as per 2011-12 rates.

The CAG was particularly severe on the water resources department’s inability to enforce contractual conditions on the contractor over the years and said several concessions amounting to Rs 1853.08 crore were allowed to the contractor of the head works in relaxation of agreement conditions for timely completion of work but that the progress was not in tandem with the scheduled time.

The CAG said the government was yet to acquire 36,009 acres in the submergence areas and a further 26,830 acres for allotment to the PFAs as of July 2017. It also said the government was yet to sort out submergence issues with neighbouring states of Odisha and Chhattisgarh.