Agri Business

CAG finds flaws in AP irrigation project implementation

Our Bureau Hyderabad | Updated on April 01, 2011

The Comptroller and Auditor General of India (CAG) has pulled up the Andhra Pradesh Government for its incorrect sequencing of works of major irrigation projects that resulted in blockade of huge amounts and inordinate delays of 206 projects resulted in huge cost overrun of Rs. 27,235 crore.

This has also resulted in blocking Rs. 36,165 crore spent so far on them. The delay in completion of these projects within stipulated period resulted in cost escalation and deprived the State of intended benefits for a long time.

In the report tabled in the State Legislative Assembly, the CAG indicted the Government for doling out undue benefits to contractors at the cost of State's interests.

A scrutiny of mobilisation advances paid to contractors in eight projects revealed many deficiencies including incorrect payment of advances and wrong calculation of interest rates.

Following the audit review, the CAG spotted how lack of proper sequencing of works resulted in spending Rs. 1,473 crore on Sriramsagar Flood Flow and Rs. 607 crore on K.L. Rao Sagar (Pulichintala) project earlier than required resulting in blockage of funds on incomplete projects.

The Government went ahead with civil works without completing designs, obtaining environmental clearance, ensuring rehabilitation and resettlement of families affected by the projects and land acquisition prior to award of the project.

While the main canal works worth of Rs.1,300 crore were completed, the reservoir, a key component was not completed resulting poor priority of investments, the CAG found.

Further, the Government did not incorporate safeguards in the contract agreements to ensure that families affected by these projects were properly taken care of. There was no socio-economic survey to identify project affected families, resulting in unrest in some areas.

The CAG was critical about the was irrigation department failed to encash the bank guarantees given by the contractors including those relating to mobilisation advances. “Instead of encashing the guarantees, the department waited till the contractors approached the court and obtained stay orders,” the CAG said.

In its remarks, the CAG observed that since irrigation projects involve huge financial outlays, cash flow management and cost control are vital for achieving the objective of value for money. Lack of proper planning, abnormal delays in land acquisition, prolonging gestation period, resulted in denial of any benefit to targeted beneficiaries.

Published on April 01, 2011

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