response-audit report on jalayagnam-vol.2

7/27/2019 Response-Audit Report on Jalayagnam-Vol.2

1/322

Go To ContentsPerformance Audit Report on Jalayagnam

194

Response ofIrrigation & Command Area

Development Department

to the Draft Performance Audit

Report on

Jalayagnam

Vol. 2

Irrigation & CAD Department.

Government of Andhra Pradesh

July 2012


2/322


3/322


196

27

Devadula Lift Irrigation Scheme (J.

Chokka Rao Godavari Lift Irrigation

Scheme)

5.10

28

Chitravathi Balancing Reservoir (CBR)

Right Canal (Lingala Canal) and Lift

Irrigation Scheme

5.11

29 Gandikota - CBR Lift Irrigation Scheme 5.12

30Modernization and Micro Irrigation of

Pulivendula Branch Canal5.13

31 Somasila Project 5.14

32 Somasila Swarnamukhi Link Canal 5.15

33Telugu Ganga Project (N.T. Rama Rao

Telugu Ganga Project) 5.16

34Jyothirao Phule Dummugudem

Nagarjunasagar Tail Pond5.17

35Veligonda Project

(Poola Subbaiah Veligonda Project)5.18

36Yellampally Project (Sirpadasagar

Yellampally Project)5.19

37 Bhupathipalem Reservoir Project 5.20

38

Kanthanapally Sujala Sravanthi (P.V.

Narasimha Rao Kanthapally SujalaSravanthi)

5.21

39 Sri Komaram Bheem Project 5.22

40 Sriramsagar Project - Stage II 5.23

41Thotapally Barrage Project and

Gajapathinagaram Branch Canal 5.24


4/322


197

42Vamsadhara Project - Stage-II (Bdooepalli

Rajagopala Rao Vamsadhara Project)5.25

43

Uttarandhra Sujala Sravanthi (Dr. Babu

Jagajjivan Ram Uttarandhra Sujala

Sravanthi

5.26

44 Venkatanagaram Pumping Scheme 5.27

45 Project Completion 6

46 Creation of Irrigation Potential 6.1

47 Completion of Projects 6.2

48 Completion of Packages 6.3

49 Quality Assurance 7

50 Monitoring 8

51 Project Monitoring System 8.1

52 Financial Management 9

53 Budgeting 9.1

54Funding under Accelerated Irrigation

Benefit Programme (AIBP) of GOI9.2

55 Allocative Pririties 9.3

56 Impact on State finances 9.4

57 Conclusion 10


5/322


198

5. PROJECT EXECUTION:

5.1 Status of the projects

In the year 2004, the Government of A.P. has given toppriority for irrigation and identified 26 projects to be taken up

as Prioritized Projects and subsequently the number of

projects proposed under Jalayagnam increased to 86 Nos

including 12 Nos Flood Banks & Modernization works at an

outlay of Rs.185609.35 Crores. Four projects are yet to be

taken up viz., Uttarandhra Sujala Sravanti, Kanthanapally

LIS, Modernization of Yeleru System and Modernization of

Nagavali System.

The details of 74 Irrigation projects (excluding Flood

Banks & Modernization works) are as follows:

REGION

No. of Irrigation

projects proposed

under Jalayagnam

Estimated cost

(Rs in crores)

Coastal 21 30356.11

Telangana 30 105433.96

Rayalaseema 23 32656.69

Total 74 168446.76

So far 82 projects are grounded. Of these, 13 projects (including

one more project i.e Ralivagu Project during 2011-12) have been

completed i.e 6 Nos in Andhra Region, 3 Nos in Rayalaseema

Region and 4 Nos in Telangana Region. Out of the remaining 69

ongoing projects, partial IP is created in 22 projects and they are

at various stages of construction as below.


6/322


199

RegionNo. of

projects

Financial Progress

Above 50% Below 50%

Coastal 20 9 11

Telangana 27 20 7

Rayalaseema 22 13 9

Total 69 42 27

5.1.1 Non-receipt of clearances

ISRLIS: There are no railway lines National Highways and Gas

Pipelines crossing in these schemes.

RDLIS: There are no National Highways and Gas Pipelines

crossings. Proposal of 9 railway crossings were submitted to the

railway authorities for according permission and for balance 3

Nos, proposals are awaited from the agency.

JRPDNSS: Proposals for 4 Nos. Railway crossing and One

National Highway crossing are awaited from the agencies.

Jawahar Nettempadu:The required amount payable to the South Central Railway

authorities have since been deposited and the bridges are in

tender stage.

Sripada Yellampally Project: In Sripada Yellampally Project,


7/322


200

non receipt of clearances have not affected the project

completion time. Permissions were obtained from the authorities

concerned for the electrical poles, Power lines, shifting of towers

and the same are being shifted simultaneously during the

execution of the work. The works are under progress without any

obstruction.

Pulichintala Project:

No pending clearances in respect of Pulichintala Project.

Polavaram Project:

The audit pointed out that clearances were received,

involved change in scope of work in Indira Sagar Polavaram

Project, which resulted in disputes with the contractors and pre-

closure of works mid way. This is not correct. The reasons for the

pre-closure are due to slow progress, lack of co-ordination etc.,

partly attributable to the contractors.

In respect of ISPP canals, the Irrigation Department is

constantly pursuing the clearances from HPCL/GAIL authorities.

However the same are delayed due to the nature of the crossings

i.e. inflammables are involved and the HPCL/GAIL authorities areconsidering all the safety precautions in designing such a huge

crossings and hence the delay and there is no laxity on the part

of the Irrigation Department. Moreover the delay is not at all a

hindrance to overall progress of the work as the length involved

in such crossings is very small when compared to the total length

of the canal.


8/322


201

Similarly, the canal is also crossing N.H-5/16 at 10

locations. Number of permissions is required for National high

way crossings from the Government of Andhra Pradesh and

Government of India which is a lengthy process. Action was taken

to deposit the amount requisitioned by NHAI and the authorities

have been frequently pursued.

In addition, there are two railway crossings in package-8 of

ISLMC for which necessary amounts have been deposited as per

the requisition of the Railways and the authorities are being

pursued to expedite the work.

B.R.R Vamsadhara Project Phase-II of Stage II :

1). In principle consent of CWC clearance: As per IS Agt of 1962

AP is entitled to utilize 50% share of Vamsadhara waters.

Accordingly the proposals for In-Principle Consent from theCentral Water Commission were submitted to Chief Engineer,

PAO(s), Central Water Commission, New Delhi vide letter dated

25.8.2005. The replies for remarks communicated by the Central

Water Commission in this regard were submitted during 02/2006.

Subsequently, in compliance to the decisions taken during the

interstate meeting held on 24.04.2006, the Detailed Project

Report for Vamsadhara Project Phase-II of Stage-II was prepared

and submitted to the Central Water Commission and Government

of Orissa in anticipation of In-Principle Consent of CWC on the

proposals of Vamsadhara Project Phase-II of Stage-II . The

remarks of CWC on DPR are being attended to .


9/322


202

2). R&R Clearance :

The proposals for obtaining clearance from Ministry of

Tribal Affairs regarding the implementation of R&R were

submitted to the Government. However, the Government have

remarked to revise the R&R cost proposals in the light of

G.O.Ms. No. 76, dated 13.4.2006. Since the R&R is being taken

up phase-wise, the Project authorities have requested the

Government to recommend the R&R proposals to MOTA. The

clearance from MOTA is being pursued.

3).Investment Clearance:

In respect of Vamsadhara Project Phase-II of Stage-II, the

clearances involved at various ministries are being pursued.

Certain clearances like Environmental clearance, Forest

clearance were obtained from concerned ministries (MOEF).

Meanwhile , the cost of the project is being met from the state

Plan funds . On receipt of necessary / balance clearances from

ministries, investment clearance will be obtained from planning

commission.

The main contention of the I&CAD Department, expressed

in discussions, was that the Department could not afford to wait

for fulfillment of these pre-requisites, since this would take an


10/322


203

unduly long time. Hence, advance action for tendering ,

contracting and project execution was initiated, alongside action

for obtaining of clearances / land acquisition.

THOTAPALLI BARRAGE PROJECT EPC PACKAGE No-II

The works of the canal system is likely to have several

crossings for National Highway, State Highway, Other Roads,

Railway Lines, HPCL Oil pipelines, GAIL gas pipelines, Water

pipelines etc., and as such necessary letter to grant the

permission for crossing those premises shall be issued to the

respective authorities by the Engineer-in-Charge. However the

Contractors will have to keep the follow-up and obtain timely

clearance from the concerned authorities costs of those crossing

are included in the Bid except the crossings pertaining to railway

lines.


11/322


204

The Government in Memo. No.17873/Major.Irr.1(2)/2006-15,

Dt:26.06.2007 has issued instructions as Deletion of execution

of bridge across canal system on National Highway Authority of

India from the purview of EPC contract. Further it was stated

that the quantum of work to be deleted from the scope of the

EPC contract is to be assessed by the State Level Standing

Committee Constituted vide G.O.Ms.No.144, I&CAD (Reforms)

Department, Dt: 13.06.2007 and submitted the proposals to the

Government for approval of effecting the deletion from the EPCAgency and it should be ensured that the contracting agency

also give their concurrence for the deletion without giving scope

for raising further disputes. In Package-II there are two NHAI

Crossings. One on Srikakulam Branch Canal and another on

Vizianagaram Branch Canal. It is further ensured that the

contracting agencies also give their concurrence for deletion

without giving scope for raising further disputes.

1) The construction of all bridges across the canals falling

with in the Jurisdiction of National Highway Authority of India

shall be deleted from the purview of the EPC contracting

agency.


12/322


205

2) The construction of these deleted portion of bridges will

be taken up by the NHAI and the necessary amounts will be

deposited by the I & CAD Department in favour of NHAI. As per

the Government Memo the process of deletion of construction of

all bridges across canals falling in the jurisdiction of NHAI

Authority from the purview of contracting agency is in progress.

After approval of the above proposal, the amount towards NHAI

crossings will be deducted from the agreement value of the

agency.

NHAI policy is to investigate, design, execute, and maintain

them for specified period including concessionaire profit and

overhead charges. Further, they are insisting to provide

additional lanes keeping in view the future needs resulting in

extra cost, which are not binding on agencies. Thus the cost of

bridges taken up by NHAI are costing more.


13/322


206

5.1.2 Land Acquisition

Land Acquisition is a major activity and also a major hurdlein construction of Irrigation Projects and in particular when so

many Irrigation Projects are taken up simultaneously.

For speeding up the Land Acquisition, the EPC agency will

prepare Land Plan Schedules and submits to the Department for

further processing with Revenue authorities. Land Acquisition

involves Government lands, Patta lands, Endowment lands,

Forest lands, Court cases etc., and considering all these points,

the Government for speedy completion of Land Acquisition in

various projects, 5 posts of Special Collectors, and 44 posts of

Special Deputy Collectors were created and persons appointed to

work under Irrigation Department. District and State Level

Negotiating Committees under the Chairmanship of District

Collectors and Chief Commissioner of Land Administration (CCLA)

respectively are also constituted with suitable delegation of

powers to acquire litigation free land from land owners facilitating

Consent Awards. The Consent Awards are passed after

discussions with the land owners, duly paying higher amounts

than Registration value and the farmers are generally satisfied

with the compensation given to them. A land bank is also created

towards compensatory afforestation lands for acquiring Forest

land expeditiously.

The Land acquisition process gets delayed due to various

Court cases. There was also delay due to shortage of sufficient

staff in the cadre of Deputy Tahsildars, Special Surveyors and

Officer cadre staff in L.A. Units. To overcome shortage of Field

Surveyors and other staff, Field staff are being pooled up from


14/322


207

different Units to attend the pending Land Acquisition work

identified by Project authorities. Special Collectors, LA were

permitted by the Govt for engaging retired Surveyors on out

sourcing basis to expedite the L.A. survey. Inspite of above

delays, the arrangements / efforts made by the Government has

so far enabled to achieve remarkable land acquisition of about 6

Lakh acres (upto 03/2012) in a short period of time.

TABLE-5.4 (in acres)

REGION

REQUIRED REQUISITIONED ACQUIRED BALANCE

COASTAL 253089 204528 142677 110412

RAYALASEEMA 295891 294591 255465 40426

TELANGANA 370431 276603 198960 171471

TOTAL 919411 775722 597102 322309

Hence the audit remark that the Government failed to fulfill

its obligations relating to acquisition and handing over of land to

the contracting agencies in time for speedy execution of work is

not correct.

ISRLIS: 5716.97 acres of Non-forest is land required for entire

Project in which 937.26 acres land already acquired. Balance

land acquisition is well in advance stage.

RDLIS: 6192.57 acres of Non-forest is land required for entire

Project in which 730.35 acres land already acquired. Balance

land acquisition is well in advance stage.

The Superintending Engineer, Executive Engineers, Deputy

Executive Engineers and Section Officers are constantly pursuing

with the District Collector, Special Collector (LA) and Special


15/322


208

Deputy Collector (LA) for early completion of land acquisition.

Jawahar Nettempadu: The land acquisition authorities are

being pursued constantly by the Superintending Engineer and the

field Engineers for early land acquisition. 85% of the required

land is acquired and the balance 15% is in differenct stages of

acquisition.

Projects in Kadapa:

The Audit made a comment that the I & CAD Department failed

to acquire adequate land required for the Projects under

Jalayagnam on time.

Various factors influence the process of Land Acquisition. The

predominant factors affecting the speedy acquisition are as

under.

1)As many projects are taken up at a time, large extents of

land were required for construction of these Projects. The

sequential activities in L.A process like survey, DN & DD

etc., cannot be taken up at a time for all these Projects

with the available Revenue Staff especially experienced

Surveyors and has to be done simultaneously Project wise.

2)The land owners in some areas are creating hurdles

demanding for higher compensation.

3)In some areas, the land owners are unwilling to part their

costly gardens and are not even co-operating for peg


16/322


209

marking.

4)Paucity of funds.

This Department is constantly bestowing its best efforts in

co-ordination with Revenue authorities in overcoming the

hurdles encountered in Land Acquisition.

Projects in Kurnool:

I & CAD department have sent the LA proposals to LAO

immediately after receipt of EPC agencies. The lands were to be

acquired by LAO after following the procedures of their

department. Land acquisition generally gets delayed when there

is dispute between land owners and LAO on quantum of

compensation. Sometimes, the land owners approach the courts

for higher compensation. These are unavoidable instances and

beyond the control of this department. If the works are taken upafter the completion of land acquisition as suggested by Audit,

the department have to wait up to the completion of land

acquisition and resolution of court cases and after that the works

are to be tendered and grounded with rates as on that date. Even

in this procedure gets delayed and higher rates are inevitable.


17/322


210

Table- 5.4

Sripada Yellampally project - Status of Land Acquisition

Name of the Project

Total

Land

Required

(in Acres)

Land

Requisitio

ned

(in Acres)

Land

Acquired

(in Acres)

Land to

be

acquired

(in Acres)

Rema

rks

Sripada Yellampally

Project - Stage I Phase I

- Barrage

16085 16085 12592 3493

Sripada Yellampally

Project - Gates- - - -

LA

Not

requi

red

NTPC LIS (8.50 TMC) 56-03 56-03 56-03 NIL

Manthini LIS (2.00 TMC) 581 581 133 448

SYP- Stage II Phase 5430 5430 2732 2698

1 Ha

of

Fores

t

Land

to be

acqui

red

Kaddem LIS (3.00 TMC) 85-24 85 54 31


18/322


211

Canal Network Package

No I1500 354 35 1465

Canal Network Package

No III1646 1646 699 947

Total: 25383 24237 16301 9082

As shown above, In Sripada Yellampally Project, total land is

acquired in the NTPC Lift Scheme and nearly 80 % of the Lands

are acquired in submergence area of barrage. In rest of the

Packages nearly 40 % of the land is acquired and the progress

of work is Proportional.

In I & CAD Department, earlier to adoption of EPC System, the

Major Irrigation projects like SriramSagar and Jurala were

executed under Lump sum Contract system where the Designs

and Land Acquisition are completed before entrusting the work

to the Agency. It can be observed that the time taken and cashoverruns are more than that of EPC System in creation of

Ayacut for the Public.

Pulichintala Project:

As against 24,605.83 Acres, 23,350.57 Acres is already

acquired. Acquisition of balance land is under process. R & Rworks are programmed to be completed by the end of July

2012.

Projects in North Coast:

With regard to the observation of the PAG that the I & CAD

Department failed to acquire adequate land required for any of

the projects under Jalayagnam on time and the apprehension


19/322


212

of the PAG that the provision towards land compensation

already made by the department is likely to increase in light of

new national land compensation policy to be enacted, the reply

is as follows:

The Government of Andhra Pradesh in order to expedite the

land acquisition process speedily have established several

Special Deputy Collector units in projects depending upon thesize of the project and the land involved. However the land

acquisition process is bound to have problems from public in

any irrigation projects which have to be sorted out amicably.

Further the land acquisition would also involve disposing off

court cases related to Land Acquisition which would invariably

delay the land acquisition process. These hindrances are

unavoidable and every effort is being made by coordinatingwith the revenue authorities for acquiring the land required for

the projects.

Details of Land Acquisition Particulars as of April 2012

in respect of each Project is submitted as separate

Statement 5.1.2.

The total extent of land required for all the above projects

under the control of this unit is 37,765.55 Acres, the extent of

land requisitioned is 35,800.18 Acres out of which 31,227.64

Acres has been acquired and the balance extent of land to be

acquired is 6,537.91 Acres.


20/322


213


21/322


22/322


215

response. The Government in 06/2011 had accorded permission

to go for fresh Tender call for a combined work Spillway, Dam

and Excavation of foundation of 960 MW Hydro Power House.

The tenders are floated during 06/2011 and moderate response

was received. But due to various implications involved in the

offers received, the Government took a decision to cancel the

Tenders and to go for fresh Tenders again. The Tenders are

invited and last date for receipt of tenders is 5.07.2012. There is

no lapse on the part of Department in selecting a new agency.

The project is found to be economically viable and technically

feasible even after considering the revised cost based on SSR

2010-11.

5.2.3 Benefit Cost Ratio

The project is found to be economically viable and technicallyfeasible even after considering the Revised cost based on SSR

2010-11.


23/322


216

5.2.4 Project Approvals & 5.2.5 Environmental clearance

Polavaram Project:

(5.2.4 & 5.2.5) The Tenders for the works in Indira Sagar

Polavaram Project were invited in anticipation of approvals on

pre-requisite clearances so as to gain time in completion of

Project. But, unfortunately, unlike other projects, this project has

faced some unprecedented circumstances after grounding the

works. To alleviate such hurdles and in accordance with the

suggestions of Central Empowered Committee, the Government

took a decision to stop the works from May, 2006 to April 2007

with an intention to obtain the pre-requisite clearances in a

smooth atmosphere. In fact, there are so many other constraints

came across even after allowing to proceed with the works by

Government in 04/2007. All these impediments are certain, even

if all these works start only after obtaining all statutory

clearances. However, the Government is planning to complete

the project in a time bound manner.

5.2.6 Clearance from Central Water Commission

Polavaram Project:

The Detailed project report has been submitted to Central Water

Commission (CWC) during 1983 and remarks to the comments

were attended by the project authorities from time to time at

CWC. The scrutiny at CWC for most of the important components

like Hydrology Directorates, FE &SA Directorates, Interstate

issues are at advance stage and expecting clearance from


24/322


25/322


218

Further the fact that the CWC and planning commission

accorded the clearances and extended central financial assistance

under AIBP to this project show that the CWC/MoWR after being

satisfied that all interstate issues in respect of this project had

been resolved,accorded Techno-economic clearance. Accordingly

the planning commission accorded investment clearance to the

project.

Godavari Water Disputes Tribunal was formed by

Government of India to resolve the interstate issues regarding

construction of Polavaram Project during 1969. After a lot of

deliberations, between the riparian states an Interstate

agreement has been entered between the states of Andhra

Pradesh, Chattisgarh and Orissa on 2.4.1980 paving the way for

the construction of Polavaram Project with FRL/MWL +150Ft,.

The Godavari Water Disputes Tribunal gave its final award on

7.4.1980 called GWDT Award 1980 in which the interstate

agreement 2.4.1980 made a part. The GWDT in its final order

stated as follows: The Polavaram Project shall be cleared by the

CWC as expeditiously as possible for FRL / MWL + 150Ft. The

design of the dam and its operation schedule shall be left to the

Central Water Commission, which they shall decide keeping in

view all the Agreements between the parties, including the

Agreement of 2nd April, 1980. If there is to be any change in the

operation schedule as indicated in the agreement of 2nd April,

1980 it shall be made only after consultation with the States of

Andhra Pradesh, Madhya Pradesh and Orissa. The design aspects

shall, however, be left entirely to the Central Water Commission.

Thus, in accordance to GWDT Award, 1980, all the

Interstate issues related to the construction of Polavaram Project


26/322


27/322


220

structures on Head works are now in progress and will be

completed in a time bound manner.

The Agency has concluded the Agreement in respect of

ECRF Dam vide Agrt. No.1/2006-07, Dt.11.08.2006 Work

Order was issued on 07.07.2007 by the SE/ISHW Circle,

Dowlaiswaram. The decision of preclosing the contract is

not due to change in designed discharge as stated in Audit.

The contracting agency started the execution of work in

07/2007. The contractor has carried out the work upto

05/2009 and stopped the work suddenly. Department has

issued several notices for resuming the work and to improve

the progress of work. In reply the contracting agency, has

attributed the reasons for slow progress of work i.e., (1) Delay

in L.A. & R&R (2) Delay in Approval of Designs by CWC etc.,

showing the above reasons the agency has not resumed the

work. Hence the Department has taken steps to terminate the

contract duly issuing notice under clause 61 of APDSS. The

Government has taken up the issue and had detailed

discussions with Department as well as with the executing

agency and finally decided to pre-close the contract and to

settle their claims amicably and reasonably to avoid legal and

contractual obligations. Accordingly the Agreement was pre-

closed vide Superintending Engineer Letter No.DB/ATO.3/W/48

EPC, Dt.28.08.2009 and the same is ratified by the

Government vide Govt., Memo. No.22241/2009, Dt.27.08.2009

& 24676/2009, Dt.23.09.2009 (Minutes of Meeting chaired by

Honble Chief Minister, Dt.23.09.2009)


28/322


221

In respect of Spillway work the PMF is not main criteria to

close the work. It is true that the CWC has recommended

the PMF of 50 lakh cusecs for the design of Spillway during

2006. The reasons for the pre-closure were partly

attributable to the agencies. The contention of the audit is

not correct.

As stated in performance audit report not even a single

structure was completed in any of the connectivity works

even after six years is not correct. In Right side

connectivities, under package 62 two main structures i.e.,

OT regulator and P-head regulator and depletion sluice of F-

saddle dam are in progress. While the OT-regulator and

depletion sluice are nearing completion. The work on P-head

regulator is completed to an amount of more than 50%.

Similarly on left side connectivities under package-67 four

structures i.e., lock-I, II, III and syphon work taken up.

While the syphon work is completed the civil works on the

remaining three locks are nearing completion. Further the

tunnel work inrespect of Package-63, 64 & 66 are in good

progress. So the contention of audit that only earth work

and no structure was done even after six years is not

correct and hence denied.

The work of Earth work excavation for foundations of

ISPHEP is included in the present tenders called for ECRF

Dam and Spillway of Indira Sagar Polavaram Project vide


29/322


222

Tender notice No. 1/2012-13, Dt. 16.04.2012. The tender is

under process. The action for commencing of HE project will

be taken up after commencing the work in ECRF and

spillway of ISPP.

Indira Sagar Left Main canal

Government have accorded administrative approval for

Rs. 1954.74 Crores vide G.O.Ms.No. 104, Dt: 30.05.2008 forexecution of Left Main Canal works. The Canal runs for a length

of 181.50 Kms in East Godavari and Visakhapatnam Districts. For

execution purpose, the Canal is divided into 8 Packages. All the

works are grounded and works are in progress.Out of 445

structures, 67 are completed and 83 are in progress. The

percentage of work done is 52%. The total extent of land

required is 10540.92 Acres under the Left Main Canal. The extent

of land so far acquired is 10251.84 Acres (97%).

Indira Sagar Right Main canal

Government have accorded administrative approval for Rs.

2240.688 Crores vide G.O.Ms No.150, Dt: 23.07.2008 for

execution of Right Main Canal. The Canal runs for a length

of 174 Kms in West Godavari and Krishna Districts. For

execution purpose, the canal is divided into 7 Packages. All

the works are grounded and the works are in progress. Out

of 248 structures 93 are completed and 22 are in

progress.The percentage of work done is 64%. The total

extent of land required for Right Main Canal in 12687.70

Acres. The extent of land so far acquired is 10749.80 Acres

(85%). The handing over of Forest land to Department is in


30/322


31/322


32/322


225

attributable to the agencies as well as the reasons not attributable

to the agencies. The contention of audit that the Government

hastily awarded Spillway and ECRF works is not at all correct. All

the required design parameters have been fixed before award of

contract and incorporated in Bid documents itself. Under EPC

contract system, the designs after detail survey and investigation

are to be furnished by the EPC contractor and after thorough

scrutiny by department the same will be transmitted to CWC for

scrutiny and approval. The execution of work will be taken up asper approved drawings only. Accordingly the construction

drawings have been submitted to the Government for PMF of 50

Lakh cusecs. As already stated, the contracts were preclosed on

account of slow progress of works due to the reasons attributable

to the agency as well as other reasons not attributable to the

agency. After preclosure of the contracts tenders have been called

for and the tenders received are under process.

The observation of the audit that the state of Andhra

Pradesh was deprived of 35 TMC of water out of river

Krishna to upper states of Karnataka and Maharashtra from

the date of clearance of Indira Sagar Polavaram Project is

not correct. As on today the upper states of Karnataka and

Maharashtra are not utilizing the additional 35 TMC of water

out of Krishna river from the date of clearances of ISPP.

Indira Sagar Polavaram Project is a major multi-purpose

project taken up across river Godavari to utilize water which

otherwise will go as waste to sea and is very important for

overall development of the State and during the

construction of such major projects several unexpected

hurdles will come in the way. The Government is


33/322


34/322


227

The audit has observed on account of pre- closure of

contracts of ECRF & Spillway the Government had to admit

a claim of contracts for Rs.19.39 Crores for the reasons

outside the ambit of the agreements. Most of the claims of

the contractors admitted by the Government are pertaining

to the infrastructure works like approach roads,

procurement of dumping areas, deposits paid by the

contractors to AP Transco authorities etc., which can be

made use of by the new executing agencies to be fixed.These available infrastructure works are specifically

mentioned in the bid document and the prospective bidders

are requested to quote their bid prices keeping availability

of these infrastructure facilities also in view. Hence, the

contention of audit is not correct.

The provisions of the agreement under clause 16 & 17 of

G.C.C and Clause 50 of APSS stipulates the contractingagencies for taking Insurance policies to cover all types of

risks including natural calamities. This will safe guard the

exchequer against any type of risk. So, the contracting

agencies have taken the Insurance policies in terms of

provisions of agreement, from the start date to safe guard

the works, plants and materials, equipment, property,

personnel against possible risks like the act of God or

natural calamities or accidents.

The respective firms have paid the Insurance premiums as

given below.

1. Spillway : Rs.2,77,80,330

2. ECRF Dam: Rs.5,11,83,412

Total Rs.7,89,14,742


35/322


228

As this is a major project involving lot of critical operations viz.,

exploration of foundations, blasting operation, usage of heavy

earth moving equipment in the hilly terrain, river surveys,

soundings, Geo-physical surveys, Hydrographic survey even

during floods which involves lot of risk to men, material,

equipment etc., insurance policy is necessary.

The contracting agencies also faced several difficulties

due to natural calamities like floods, cyclones, manmade

disturbances through local agitations and also accidents caused

during operation of heavy machinery. Thus the insurance has

covered several risks uncovered during execution of work.

As the subsisting contract of both Spillway and Earth

cum Rock fill Dam was pre closed, both the firms have claimed for

the reimbursement of insurance paid. However the State Level

Standing Committee admitted the claim to a tune of Rs. 4.0Crores and Rs. 2.39 Crores for Earth cum Rock fill Dam and

Spillway respectively duly deducting proportionate amount

towards work done.

Survey and Investigation 6.98 Crores: There is a

Provision of Rs. 10.00 Crores towards Survey Preparation

of L.P. Schedules, Investigation and designs etc., After

concluding the Agreement the contracting agency has

attended to the investigation, alignment proposals,

submission of L.P. Schedules and design proposals for

GapI,II,&III. Based on the proposals submitted by the

Agency (1) Land acquisition was taken up & completed (2)

Alignment proposals in gap gb, gg & gb were finalized (3)

The detailed designs for Gap I,(gd) Gap (gg), Gap III (gb)


36/322


37/322


230

Agreement, 2004 initiated in hastiness was poorly sequenced is

not correct. Generally execution of projects and obtaining

clearances will go on simultaneously, as the Government is very

keen in completing the pending irrigation projects on top priority

under Jalayagnam. Government of several such projects, court

intervention were encountered in respect of this project only.

The contention of the audit, that the project works are

to be taken up only after getting all clearances, completing all

investigation and designs for construction/ working drawings;completion of L.A. process; completion of R&R etc., is not at all

correct. Even by such arrangement, the escalation of the project

cost on account of time taken for completion all the formalities

like clearances, L.A, R&R, Designs etc., will be much more than

the present system where delays are in respect of certain portion

of works only where problems are encountered.

Generally the canal & distributory system works arescattered and takes more time for completion than the head

works which are located at one place. In respect of canals, even

though substantial portion of works are completed, it will take

quite a long time to complete balance works especially

problematic. Stretches held up due to local problem, ryots

objections, court cases etc., The works pertaining to balance

distributory system are to be taken up. If the canal works which

are scattered are not taken up early as there works will take more

time for completion in the light of real time problems like L.A

issues, Ryots objections, court case etc., which cannot be avoided

unlike head works which are concentrated works. When large

projects like Indira Sagar Polavaram Project are taken up, it is not

possible to take up all the components of the projects in such a

way that are all completed on the same day in whatever way one


38/322


231

plans as the problem which were encountered during execution

cannot anticipated. Further, while taking up such large projects,

the works shall be taken up such that the funds requirement such

as with Budget provision that can be made available.

All the project components were taken up almost

simultaneously with an intention to complete them simultaneously

to reap the early benefits. But on account of certain unexpected

problems, there are certain delays in execution of some

components and every effort shall be made to complete theprojects at the earliest by sorting out the problems.

5.2.11 Compromise / Reduction in specifications

Polavaram Project:

As per clause 2.5 of Section-2, general specifications of

Agreement the contractor have to submit the designs duly

carrying out investigations and it shall be as per relevant I.S.

Codes, since the drawings enclosed in the bid documents are only

tentative. Accordingly the contracting agency has carried out the

investigations and submitted designs as per the relevant I.S.

Codes. The designs submitted by the contracting Agency verified

with reference to the I.S. Codes and approved by the Chief

Engineer, Central Designs Organization, Hyderabad. Hence

question of lowering of specifications does not arise. Regarding

cost adjustment as per clause 38 and 39 of G.C.C. the contractor

bound to execute all the supplemental works that are found

essential, incidental and inevitable during execution of main work

at no extra cost to the employer. This being a EPC contract

system the contracting agency has to carry out the investigation,

soil exploration works etc., based on this prepare and submit the

drawings for approval. Hence, variations in the quantities


39/322


232

excess/less may take place. Therefore one can not see only one

side of the coin i.e. decrease in quantities. The other side of the

coin is some items such as shotcreting, construction of portals,

temporary and permanent supports etc are increased beyond the

provisions made in the estimate. The resultant savings on account

of lowering of specifications of any item of work in deviation from

the basic parameters will be assessed by referring to the State

Level Standing Committee constituted by the Government and

approval of the Government will be obtained. Such savings asapproved by Government will accrue to the Government. Hence

the observations of audit that the lowering of specification without

cost adjustment resulted in undue benefit of Rs 45.53 Crores to

the construction agency is not correct and hence denied. When

supplemental works are being executed without any cost to the

employer on single source responsibility, the other work in which

there is some saving in it have to be considered as costadjustment is not correct.

5.2.12 Land acquisition

Polavaram Project:

Total land required for working areas of ISP Project was almost

acquired.. The total land under submission of the ISP project in

three Districts 1) KHAMMAM, 2) WEST GODAVARI & 3)

EASTGODAVARI IS 88366.84 Acres out of it 45150.35 Acres of

land which is more than 50% total land required has been

acquired. Therefore, there is no shortfall in acquiring the land

required. The balance Land acquisition will be done as per

programme of the project .The total estimated cost towards Land

acquisition is Rs 3405.98 Crores only but not Rs. 8724.81 Crores


40/322


233

as reported. Out of it Rs 441.941 Crores were spent, on Forest

Land only 43216.49 Acres of Non Forest Land is yet to be

acquired. The Forest Land affected due to submergence of ISP

project is 8961.04 Acres and the process of handing forest land is

in progress. Total Land required for land to land Compensation

under R& R is 40,330.54Acres out of it 2,800.93Acres has been

acquired and balance land 37,529.61 Acres will be acquired as per

Scheduled programme.

5.2.13 Rehabilitation and resettlement

Polavaram Project:

R & R for Project Affected Families is under progress as per

construction programme of ISP Project. The draft action plan

for all the 29 habitations in West Godavari district, 43 habitations

in East Godavari District has been submitted and approved. In

respect of Khammam District, the draft action plan for about 60villages has been prepared and for remaining villages, it is under

preparation. All the villages in Khammam District are categorized

under phase 3 and 4 R&R in these villages will be completed One

year before actual submersion takes place.

West Godavari District:- Out of 478.12 acres of land

required for house sites, 280.29 acres of land has already

been acquired and the remaining extent has to be acquired

for the villages which are categorized under phase 2 and 3

and which are not urgent. Out of 3582.50 Acres of land

required for land to land, 1208.37 acres of land was already

acquired and the remaining extent is falling in the villages

which are categorized under phase 2 and 3 only. Total No.

of Housing Units to be constructed is 4139 Nos. out of which


41/322


234

352 Housing Units were completed and 1259 Units are

under Progress. Out of total PAFs of 4363., 490 were

Rehabilitated.

The infrastructure works for all the 7 villages falling in 1st phase

have been completed already and the remaining villages fall under

2nd and 3rd phase. The Socio Economic survey for all the

prioritized 1st phase villages has already been completed.

Rs.106.560 Crores has been spent so far on R&R in West Godavari

District

East Godavari District:- The infrastructure facilities for the

1st phase villages has been completed and the same for

remaining villages which are in 2nd, 3rd phases is under

progress. The land for 4 prioritized villages has already been

acquired. The Below Poverty Line housing units to a tune of

498 nos in 1st phase have been completed and remaining

units which are categorized under phase 2 and 3 are under

various stages. Total No. of Housing Units to be constructed

is 4409 Nos. out of which 498 Housing Units are completed

and 119 Units are under Progress. Out of total PAFs of

4643, 481 PAFs were rehabilitated. Rs. 25.763 Crores has

been spent so far on R&R.

Khammam District:- All the villages are categorized under

phases 3 and 4 which are affected under submersion only.

The R&R in this district will be completed 1 year before

actual inundation takes place. Total No. of Housing Units to

be constructed is 33708 Nos. As the process of Land

Acquisition is still under progress these housing units were

not yet completed. Total PAFs are 33708. Rs. 6.178 Crores


42/322


235

has been spent so far in Khammam District. Therefore the

R&R implementation is as per programmed action plan.

The draft plan for most of the villages pertaining to ISPP

was prepared. Every effort is being made to complete the R&R for

all the affected villages as per action plan. In respect of

Chattisgarh and Orissa, there will not be any submersion of lands

and villages due to proposed construction of protective

embankments in the territories of Orissa and Chattisgarh, The

submergence issue of ISPP in Chattisgarh and Odisha was settledlong back in terms of Interstate agreement Dt 2-4-1980 and

GWDT award. The contention of audit that the submergence issue

with Chattisgarh and Odisha were not sorted out and led to

prolonged litigation is not at all correct. The observation of audit

that there have been consistent lethargy towards R&R is not at all

correct. As implementation of R&R involves coordination and

carrying out works from different departments duly consultingaffected people. The R&R work will be completed as per the

action plan. The implementation of R&R for Gandikota has been

recommended as this particular village Gandikota was a

rehabilitation village which is again affecting under PLIS sub lifts.

5.2.14 Coordination with Statutory organizations:

Polavaram Project:

In respect of ISLMC, as per clause 27 @ page No.110 of the

agreement, the E.P.C. agency has to follow up with the

Department for obtaining clearance and take-up the

construction.


43/322


236

However as per the policy decision taken by the NHAI, the

grant of permission for way leave facility (Canal crossings) will be

accorded by NHAI provided the Government of Andhra Pradesh

foot the bill for the entire scope of work involved and to be carried

out as deposit work.

After protracted correspondence and obtaining information

from NHAI, Government vide G.O.Rt.No.103, dated 13.02.2012

accorded permission for payment of Planning and estimatecharges and amount has been paid to NHAI in 03/2012.

Permission is awaited.

Planning and estimate charges have been paid to NHAI in

03/2012. Permission is awaited.

In respect of ISRMC Package II

1) HPCL & GAIL Crossing in between Km 19.200 and km 19.750 ofRMC

The laying of new pipe lines of HPCL/ GAIL at the point of

crossing of RMC is the most suitable option, among the various

studies made, as suggested by HPCL / GAIL authorities. Further it

is submitted that as per agreement condition 27 of Special

conditions of contract, it is the responsibility of the contractor to

obtain clearance for HPCL oil pipe lines and GAIL gas pipe lines

from the concerned authorities and cost of the crossing of pipe

lines are included in the bid. As per agreement condition 24 of

other special conditions (Appendix OS), if the canal system is

crossing HPCL oil pipe lines, GAIL pipe lines or any other pipe lines

the contractor shall provide suitable crossing in consultation with

the authorities concerned after obtaining the approval either by


44/322


237

himself or getting them executed by the concerned authorities as

a deposit work duly depositing the requisite amount to HPCL/

GAIL authorities. The Engineer-in-Charge will help in processing

the proposals to the authorities concerned to obtain their

permission. The cost of such crossings shall be deemed to be

included in the contract price.

In view of the above facts it is submitted that the

department have taken necessary action from time to time to

obtain the permission from GAIL & HPCL authorities. Several

times the Prl.Secretary to the Govt., (Projects), I&CAD dept,

Hyderabad and the Engineer-in- Chief, ISPP, Dowlaiswaram

reviewed the status of permission. Because of technical difficulties

only, as per site conditions, new pipe lines are inevitable and

because of the efforts made by the department with proper

coordination with GAIL& HPCL authorities present status of

permission could be obtained. The agency is requested to deposit

the amount and as soon as the amount paid by the agency work

will be completed .There is no financial burden on the Govt., since

the cost of crossings has to be paid by the agency within the

contract price.

2) Electrical lines in RMC Package-II

As per agreement conditions electrical lines coming in the

alignment of canal shall be shifted by the EPC agency at their own

cost within the contract price. At many places the EPC agency

shifted the electrical lines at their own cost duly paying requisite

charges to APEPDCL.

From KM 35.000 to Km 37.000 of RMC, 33 KV and 11 KV

lines are existing in the canal alignment. The Department pursued


45/322


238

the matter with APEPDCL. The APEPDCL authorities informed to

pay an amount of Rs.20.47 lakhs towards shifting of 11 KV and 33

KV lines. The agency was requested to deposit the amount. The

department have taken necessary action from time to time for

shifting of electrical lines. Now action is being taken by the

Department to shift the electrical lines in between Km 35.000 to

37.000 within the contract price only.

ISRMC Package No.IV :-

GAIL pipe line is crossing ISRMC at Km 103.700. After pursuing

the matter with the GAIL authorities, an amount of Rs.1.05 lakhs

was deposited to the GAIL authorities for preparation of estimate.

At the time of preparing detailed estimate, certain field

information was sought for by the GAIL authorities. While

gathering the required information at field, ryoths of Pedavegi (V)

were objected the survey works and not allowed into the fields

duly arguing that the area is covered under stay orders of the

Honble High Court, Hyderabad in W.P.No.27352/2007. Hence, it

is not possible to furnish the required information to the GAIL

authorities.

5.2.15 Unforeseen ground conditions

uncertainties involved in bidding:

Polavaram Project:

Polavaram Project canals works are still under progress.

Only 50 to 60% works are completed and the lining works

under these excavated canals are under progress. The

original alignment of these canals is going through Black


46/322


239

Cotton soils in some reaches. In these reaches CNS

(Cohesive Non Swelling) treatment below the lining course

was provided in IBM estimates to reduce the effect of

swelling and shrinkage of the soils. After entrusting the

works to the EPC contractors and after detailed survey by

the agency, it was decided to take the alignment in cutting

only rather than partial cutting or embankment and the

revised alignment was approved in place of original

alignment proposed in IBM estimates to safeguard the canalsystem. Because of these reasons there were some

changes in the alignments of canals proposed earlier. As

the alignment of canals were changed, the length of the

canal, quantity of earth work excavation and structures on

the canal in each package work are increased heavily. It is

well known that the above changes caused heavy

expenditure and the contractors represented Governmentfor additional payments and these proposals were rejected

by the Government. In as much as 52% of the lining works

are completed the reaches where CNS treatment is required

is not fully identified. As the above fact is very clear, it is

not rational to say that the amount provided in IBM

estimate towards CNS treatment is fully paid to the

contractor.

In respect of Packages 63 & 64, the tunnels were provided

with concrete lining thickness for 900 mm in the estimate as

per approved drawings by the CE/CDO/Hyderabad based on

detailed soil exploration/ bore hole data. Lining thickness of

900 mm was provided due to lack of data on investigations

is not correct. Now as per detailed design calculation based


47/322


240

on IS Codes and rock strata available in the field, concrete

lining thickness of 800 mm was finalized and approved by

the CE/CDO, Hyderabad. The agency proposals to provide

concrete lining thickness of 500 mm is insufficient, hence

not accepted. However, the savings due to reduction of

lining thickness in Package 63&64 have been worked out

and recovery proposals to this effect have been submitted

to the Government. Hence the contention of audit is not

correct.

In respect of ISRMC Package-3, the work Earth Work

Excavation, formation of embankment and construction of CM

& CD works including investigation, designing and estimation of

ISRMC from Km 38.199 to Km 71.500 was awarded on EPC

basis to M/s. Hindustan Construction Company Ltd., Mumbai

vide Agreement No. 11 SE /2004-2005 Dt:23-10-2004 for anagreed value of Rs.321.30 crores at 3% excess over ECV of

Rs.311.94 Crores. The work was scheduled to be completed

within 24 months i.e 22.10.2006. EOT was sanctioned up to

30.062012.

The Right main canal is carrying huge discharge of 391 Cumecs

the alignment running in full cutting in higher contour is

considered instead of those having embankment reaches to avoid

formation of breaches and R4 alignment is approved . Infact the

ryots have filed a W.P.in the Hon`ble High court vide

W.P.No.452/06 which was dismissed on 07/4/2006 uphelding the

decision of the CE, CDO for approving the R4 alignment. The only

alignment approved by the dept, was R4 alignment keeping in

view to minimize embankment and to avoid risk of breaching. As


48/322


241

per EPC norms agency has to execute the work as per approved

alignment only. Hence the agencys claim for Rs.58.49 Crores is

not untenable and hence rejected. The contention of audit all

these issues have cropped up only because of lack of detailed

survey and investigation and unforeseen soil condition is not

correct. Under EPC contract all the items of works from

investigation, designs, execution and completion of works

including O&M falls under single source responsibility of the EPC

contractor.

5.2.16 Approval of designs:

Polavaram Project:

Status on approval of Designs as on 31.05.2012.

Total No.of structures : 717

No.of Designs submitted by the Agency : 558

No.of Designs approved : 414

No.of Designs under scrutiny at O/o

CE/CDO & CE/ISPP: 15

No.of Designs returned at different stages

of scrutiny i.e, from O/o ENC/ISPP and O/oCE/CDO with major remarks and for want

of further field data etc., and still pending

with Agency for re submission

: 129

No.of Designs yet to be submitted by the

agency: 159

From the above status report it is clear that out of 303 Designs

yet to be approved, only 15 Designs are under scrutiny with

Department i.e., at O/o ENC/ISPP and O/o CE/CDO, and the rest

i.e., 288 Designs are pending with Agency, of which 129 Designs


49/322


242

are pending for resubmission after attending the remarks and

supplementing further data called for, and 159 Designs are

pending for first submission itself till to date.

5.2.17 Third Party Supervisions:

Polavaram Project:

The TPQC package 17 consists of Head works 62 to 67

packages. The QMP for package 62, 63 & 64 are with the

department and the same will be transmitted to the TPQC

Agency. For the remaining Packages the department isconstantly pursuing with the Agencies. As soon as received from

the Agencies it will be transmitted to the TPQC Agency for

review.

At present no works are in progress in Package No.5, 6 &

7 of ISRMC which comes under the purview of Package No.20 of

3rd Party Quality Control. The works are held up for want of land

due to delay in land acquisition due to Ryoths objections and the

stay orders of Honble High Court. In spite of constant

persuasion through Advocate General of Andhra Pradesh, the

matter in the court is still pending.

The civil works in Packages 5 & 6 are stopped since

06/2009 and continuing as on date except two months in


50/322


243

Package No.5, where as the works of Package No.7 are

continued up to March 2010. Even though the works are idle in

Package No.5&6, the agency carried out the Q.C/Q.A operations

in Package No.7 where the works are continued up to March. At

the same time, the agency carried out non destructive tests in

the completed reaches in Package No.5 & 6 in the idle period. As

Package No.7 is one of the component of Package No.20, an

amount of Rs.1.17 Crs was paid to the agency towards

supervision charges at Rs.12,98,573 per month for 9 Months i.e,from July 2009 to March 2010. Beyond March 2010, the services

of agency are continued expecting the land is being handed over

and the court cases are cleared. However, the payments were

paid by the concerned Quality Control Authorities.

The Government have accorded permission vide

G.O.Ms.No.29 dt:04.06.2011 to continue the services of the 3rd

Party Quality Control agency with selection staff duly paying the

remuneration of Rs.1.57 Lakhs Month to M/s Engineering Staff

College of India, Hyderabad for Package No.20 of ISRMC till the

package works are resumed.

Accordingly the supervision charges are being paid to the

agency from 01.07.2010 onwards for selection staff only.

5.2.18 Stoppage of works midway:

Polavaram Project:

There is a provision of Rs.10.00 Crores towards Survey,

preparation of L.P. Schedules, Investigation and designs etc.,

After concluding the Agreement the contracting agency has

attended to the Investigation alignment proposals & L.A.


51/322


244

proposals including submission of L.P. schedules and designs of

proposals Gap I, II & III Based on the proposals submitted by

the Agency (1) Land Acquisition was taken up & completed (2)

Alignment proposals were finalized (3) Based on the data

furnished by the agency the Central Water Commission has

issued working drawings (estimate purpose) for the Earth-Cum-

Rock Fill Dam for Gap I&II. Based on the work done by the

agency an amount of Rs.4.11 Crores paid to the agency against

Rs.10.00 Crores claimed by the agency. However in the balanceestimate a provision of Rs.5.00 Crores was made available

towards balance Investigation & Designs etc, to the second

agency. Hence there will not be any extra payment to the

second agency.

5.2.19

Unwarranted owning of contracting agencies burden:

Polavaram Project:

The audit has observed that one of the objectives of EPC

turnkey system of contracting was to eliminate the need for

revision of project cost. It also observed that the department

owned the burden of the contracting agencies in several aspects

and listed two packages (Package-67 & 62) of ISPP out of 12

cases reported.

The above observation of the audit are not correct. The

objective of the EPC system of contracting is not to have cost

over run pertaining to the works coming with in the scope of the

contract. Any works which are not contingent and fall out side of

the scope of the contract are to be treated as extra item and

payment is to be made to this extra item as per clause 39.3.1 of


52/322


245

GCC of agreement. The audit is calling out the extra items which

fall out side the scope of the contract as the burden of

contracting agencies and pointing out that the department is

owing such burden of contracting agencies is not correct. The

details of additional item which fall out side the scope of

contract in respect of 62 & 67 of ISPP are furnished below.

Package: 62: As stated in performance Audit report i.e., the

action of Government was unwarranted and resulted inunavoidable burden to the Government and undue benefit to the

contractor is not correct. Essentiality of providing depletion

sluices to saddle dam E & F was finalized only after Design

experts decision during field visit to Polavaram Project in

December-2007. It is a unforeseen item and out side the scope

of original contract. As per agreement conditions 39.3.1

whenever additional item not contingent to main work and outside the scope of original contract are to be entrusted to the

original contractor, on entrustment of such items and price to be

paid shall be referred to a committee constituted by

Government for final decision. Accordingly, the depletion sluices

item was referred to state level standing Committee for

decision. After elaborate discussions only, additional item was

recommended to the Government, by the State Level Standing

Committee. Hence as per agreement condition 39.3.1 it is

genuine to consider as an additional item. The observation of

audit that even such additional item which fall out side the

scope of the contract clearly as burden of agencies is not at all

correct and amounts to violation of agreement condition.

Package: 67: The construction of flood gate was not included


53/322


246

in the original scope of work, basic parameters and also in the

agreement. Only after detailed investigation, the necessity of

the flood gate structure was identified and recommended to the

State Level Standing Committee to take up the work as an

additional item of work not contingent to original work under

clause 39.3.1 of the GCC of contract. As per the state level

standing committee recommendations, the Government

accepted and accorded permission to construct the flood gate

structure. The financial aspect is still under examination.Hence the contention of the audit that this item of work is

burden of agency is baseless incorrect and denied.

5.2.20 Payment Schedules Preparation and Revisions:

Polavaram Project:

The observation of the audit that in Indira Sagar Polavaram

Project, the payment schedules are improperly fixed and the

revision was not based on the detailed estimates is not correct.

The details are furnished below:

The work ISRMC Package No.VI i.e., Earth work

excavation, formation embankment and construction of

CM&CD works including investigation, designing and

estimation of ISRMC from KM133.800 to KM 156.500

was entrusted to M/S Progressive constructions ltd,

Hyderabad vide Agreement No.8SE/2004-2005 dated

20-10-2004 on EPC turnkey system.

Out of total length 24.078KMs, the land handed over to


54/322


55/322


248

sanctioned by the Engineer-in-Chief Vide ref.

No.2/2004-05, Dt.7-10-2004 for Rs.248.44 Crores. The

work was awarded to M/s Patel-Soma J.V, Mumbai Vide

Agt. No. 9 SE/04-05, Dt.21-10-2004 for Rs.241.50

Crores.

Out of the total length of 14.80 kms.(from km.0.000 to

km14.800 of ISRMC), 12.80 Kms length of Earth work

excavation and 11.725 kms length of CC lining and 22Nos of

CM & CD structures were almost completed out of 25 Nos and3 Nos (2 OTs and 1 Surplus escape) yet to be started and the

balance 2.00 kms work was held up due to Forest Area and

R&R problem.

The detailed estimates submitted by the agency as per

the approval Hydraulic particulars, the payment schedule

works out to 41.80% for Earth Work Excavation, 31.50% for

CC Lining, and 26.70% for CM & CD Works against thepercentages made in the payment schedules in original

agreement. The Physical percentage of work done, so far is

87.85% EWE, 78.30% CC Lining, 84.60% CM & CD Works.

The Land required for the work has been handed over to

the agency in stages as and when the land acquisition

authorities hand over the land to the irrigation department.

The agency commenced the Earth work, CC lining,

Construction of CM & CD Works simultaneously in the reaches

where the land is available. So, the contention of the audit that

the items like Earth work Excavation was taken up as front

items and the construction of CM & CD works as backend items

is not correct. Hence the contention of the audit that huge

front loading for the items taken up in the beginning is not


56/322


249

correct about 90% of work is already completed.

Even though the original payment schedule was fixed

erroneously, the contractor executed all the three components

simultaneously and there by there is no front loading

payments made to the contractor.

There is no excess amount made to the agency. Further,

the payment schedule is being revised for the balance work tobe done by the agency as per the actual quantities.

The work "Earth Work Excavation, formation of

embankment and construction of CM & CD works

including investigation, designing and estimation of

ISRMC from Km 38.199 to Km 71.500 " was awarded on

EPC Turnkey basis to M/s. Hindustan Construction

Company Ltd., Mumbai. vide Agreement No. 11 SE /2004-2005 Dt.: 23-10-2004 for an agreed value of Rs.

321.30 crore..

As per the agreement conditions 41.2.1 of cost

control in the agreement the total work specified under EPC

turn Key contract is divided into several components of work to

facilitate payments component wise. The work of the each of

the components are specified as percentage of the total bid

price under Annexure-II, Schedule of payments. In EPC

contract system there is no change in total amount to be paid

to the contractor. The payment schedule was fixed based on

the approximate quantities in the IBM. After conducting

detailed investigation the agency has submitted details for

earth work quantities only.


57/322


250

Originally the canal Earth Work Quantities was arrived

based on tentatively alignment in which canal is running in

balance depth of cutting. The present alignment approved by

Department duly keeping the FSL almost below ground level.

Due to this the Earth work Excavation in cutting has been

increased abnormally due to deep cuts in alignment. Further

due to reduction in length of canal (2.589Kms.) the quantity of

lining work is decreased. Hence the main components such as

Earth work, lining have been changed and the firm hassubmitted the revised payment schedule.

As per the approved HPs the earth work quantity is increased

to from 1.14 Crores cum. To 2.40 Crores cum. Hence the

revision of payment schedule is necessitated. Hence the

Government have approved the revised payment schedule to

regulate the payment as per the agreement clause 41.2.1

Vol.I, Part-A, conditions of contract.

Even the alignment is running in higher contour

(deep cut portions) the lining quantity is not increased as the

perimeter of lining proposed is constant throughout reach. The

logic of the audit that the lining quantity shall increase if

earthwork quantity increases is not correct as the length of

canal is decreased and depth of cutting is only increased.

The payment schedule contemplated in Agreement and revised

payment schedule submitted by the agency and revised

payment schedule approved by the Govt. is as follows.

Sl

NoDescription

Earth work

excavationLining

CM&CD

worksTotal


58/322


251

1Percentage as per

agreement20.91 41.61 37.48 100

2

Amount as per

agreement

(Rs Crores)

67.18 133.69 120.43 321.30

3Restriction to

agreement value

97.39

(30.31)

101.20

(31.50)

122.71

(38.19)

321.30

(100%)

4

Percentage as per

revised payment

schedule asapproved by Govt.

30.31 31.50 38.19 100%

The payment schedules are revised considering the quantities

of earth work, Lining and structures and approved by the Govt

memo no.6818/Maj.Irrgn.1(2)/2006.. Hence the contention of

the audit that the corresponding lining work is not increased is

not correct as the values of the components Earth work and

Structures are infact increases as per actuals and restricted to

the agreement value . as shown in the above table. The lining

amount as per the agreement of Rs 131.587Crores has been

decreased to Rs 101.20Crores due to decrease in length. But

due to proportionate restriction to agreement value, the

percentage lining component is reduced from 41.61% to

38.19%.There is nothing absurd in the calculations. Thus thecontention of the audit that the revision of payment schedule

resulted in advance/ premature payment on front end items of

Rs 30.21Cr is not correct.

The work "Earth Work Excavation, formation

embankment and construction of CM & CD works includi

investigation, designing and estimation of ISRMC from Km 71.5


59/322


252

to Km 105.100" was awarded on EPC basis to M/s. Jayaprakas

Gayati JV, Hyderabad vide Agreement No. 10 SE / 2004-20

Dt.: 23-10-2004 for an agreed value of Rs. 301.30 crore at

tender discount of 5.71% of ECV of Rs. 319.53 Crore. The wo

was scheduled to be completed within 24 months i.e 22.10.200

EOT was sanctioned up to 30.06.2012.

Due to change in the alignment of canal from balance dep

of cutting to FSL cutting & deep cutting, the length of the canalincreased from 33.600 Kms to 36.065 Kms. Due to increase

length of canal, and running the canal in full cutting there

increase in Earth work, lining and CM&CD Works.

The revised payment schedule is as follows considering

detailed quantities for Earth work , Lining. The cost of CM and

CD works, is arrived based on the cost as per sanctionedestimate.

Sl

No

Description Earth work

excavation

Lining CM&CD

works

Total

1 Percentage as per

agreement17.079 36.99 45.931 100

2 Amount as per

agreement(Rs Lakhs)

5145.90 11145.09 13839.01 30130


60/322


253

3 Amount as per Revised

payment schedule of

approved alignment for36.065km in lakhs with

estimate rates

10677 11183 14100 35960

4 Proportionate restriction

to agreement value8946 9370 11814 30130

5 Percentage as per revised

payment schedule29.69% 31.10% 39.21% 100%

The payment schedules are revised considering the

quantities of earth work, Lining and structures and approved

by the Government in Govt.Memo No.6818/Maj.Irrig.I

(2)/2006-1 dt 22-3-2006. Hence the contention of the audit

that the corresponding lining work is not increased is not

correct as the values of the components are infact increased as

per actuals and restricted to the agreement value on prorata

basis, as shown in the above table. The lining amount as per

the agreement of Rs 11145.09 lakhs has been increased to Rs

11183.00 lakhs due to increase in length. But due to

proportionate restriction to agreement value, the percentage

lining component is reduced from 36.99% to 31.10%.There is

nothing absurd in the calculations. Thus the contention of the

audit that the revision of payment schedule resulted inadvance/ premature payment on front end items of Rs 38.00

Cr is not correct.

In respect of package 66 of ISPP, initially the agency

has started the work to a small extent in the non forest

area where the land was made available to work since

the major part of the work was involved in the Forest

area. The IBM values were arrived as per the


61/322


254

preliminary investigation only.

The total earth work quantity provided in the IBM

estimate as 1,88,598 Cum (i.e, soil quantity as1,05,533 Cum

and Hard Rock quantity as 83,065 cum)

During actual execution, the total quantity arrived

at 3,06,425 Cum (i.e, soil quantity as 7765 cum and Hard

Rock as 2,98,660 Cum) based on the approved H.Ps and

detailed estimate prepared and thus the value of the

component is also increased. The payment of Rs.3.33 croreswas made as per the payment schedule provided in the

original agreement. Out of which an amount of Rs.3.06 crores

was made towards earth work excavation and the remaining of

Rs.0.27 crores was made towards investigation work.

Considering the actual quantities of work involved,

there was no excess or front load payment made to the

contractor. Considering the actual quantities as per designs,the Revised payment schedule was prepared and the same

was approved by the competent authority. The forest land was

also handed over to the agency recently and the execution of

Tunnel work is in progress. Now the payment is being allowed

as per the approved revised payment schedule only.

Therefore the contention in the audit report that the contractor

benefited is not correct.

In Indira Sagar Polavaram Project, the payment

schedules of all the packages will be revised duly

including the O&M component and the payments will be

regulated.

The agreements were concluded for package 63 & 64


62/322


255

vide Agreement No.64/2004-05, Dt.09.03.2005 and

Agreement No.65/2004-05, D5.11.03.2005. Accordingly

works were grounded. As it is the first time for

grounding of works on EPC System the bills were made

as per the payment schedule appended in the

agreement. Due to stoppage of works by the

Government from dated 04.05.2006 to 11.05.2007 and

for want of forest clearance till 10/2010 the payments

which were made based on the payment schedule in theagreement of Package 63 & 64 could not be regularized.

However, soon after resumption of the works by

1/2011(package63) &12/2010(package64) the Revised

Payment Schedule was prepared and got approved

based on the approved drawings and payments were

regularized in the running account bills of the package

63 and Package 64 by 7/2011. The payments wouldhave regularized, if the work had been under progress.

Because stoppage of works by the Government and non-

receipt forest clearance from the MoEF the regularization

of payment have delayed. Hence interest forgone by

the Department and unduly benefited the contracting

agency for a period of 5 years was Rs.7.45 crores is not

correct.

The procedure adopted by the audit in assessing

Rs.32.93 Crores as premature excess payment is not

rational and incorrect. When actual quantities as per

execution are to be considered in finding out the

entitlement of the contractor for payment, it is

obligatory to consider the relevant revised payment


63/322


256

schedule based on actual quantities of execution to

ascertain the correctness of payments made. The audit

while considering the actual quantities of execution

taken it for granted the payment schedule in the

agreement as granted and assessed the premature

excess payment as Rs. 32.93 Crores in correctly. Also

structures quantity was considered as 150000 cum as

against the probable quantities of 98000 cum.

Further, in the IBM estimate provisions for earthwork,

lining, and CM& CD works are 52.14%, 21.36%, and

26.50% respectively. As per schedule II of agreement

percentage of earthwork, lining and CM& CD works are

33.51%, 44.49% and 22%. The percentages components

approved are much lower than the IBM provisions and

payments were made at lesser percentages than theeligible percentage (as per IBM). As the payments for

earthwork were being made at lower percentages and it

was considered to revise the payment schedule after

finalisation of actual quantities based on detail designs and

estimates.

As per the detailed estimate quantities the %

components of earth work, lining and structures are

worked out as 55.55%, 25.79% and 18.66% respectively.

Even from the actual quantities view, percentage

component approved in respect of the earthwork and

lining are advantageous to the department.

Had the payments were made with reference to


64/322


257

quantities, more component would have been paid in respect

of earthwork and in case of lining premature excess payment

does not arise since lining is to be done after the earthwork is

completed and lining was completed to the extent of earthwork

completed.

However, it is submitted that required component schedule

was approved as per hydraulic particulars but at present the

matter is Sub judice. Necessary action will be taken toimplement the revised payment schedule with detail

quantities.


65/322


258

5.2.21 Payments for price variations

Polavaram Project:

Inrespect of ISLMC package 2, as per Clause 37.2:37.3 and

38.1 of E.P.C, the work awarded on a lump sum contract on

EPC Turnkey basis, the contractor will be paid a firm contract

price for completion of all works as specified under the scope

of the work.

CNS soil treatment is one of the operations involved in the

finished item of work of lining, it can not be treated separately for

inclusion or deletion of the work.

However, the percentage of fuel factor was worked out as

per IBM is 12.003% and percentage of fuel factor worked out as

per actual quantities of value of work is 12.554% (copy enclosed).The percentage of fuel factor considered for payment is in

accordance with the IBM is less than the actual percentage of fuel

factor to be paid to the contractor. Hence, the remarks of the

performance audit stating that an amount of Rs. 68.10 Lakhs

excess paid to the contractor is not correct

Inrespect of ISRMC package 2, the fuel component in the

work was worked out based on the state level standing

committee recommendation and IBM estimate quantities.

The percentage of fuel component as per IBM estimate

worked out to 12.20%

For assessing the fuel component, if the actual execution

quantities were considered i.e., quantities as per approved H.Ps


66/322


259

the percentage of fuel component works out to 14.12 %, which is

higher than approved value of 12.20%. In order to assess the fuel

component, either IBM estimate (as being done in all other works

across the State) or revised estimate with actual quantities shall

be considered. If the provision of gravel backing was not to be

considered as it was not executed, then the increased quantities of

earth work, concrete and other items as per approved drawings

and as per actual execution should be considered.

As the % component with reference to IBM es

response-audit report on jalayagnam-vol.2

Documents