Hyderabad: A Rs 154-crore scam in the Hyderabad Water Board has been identified by the Vigilance wing. The Water Board had paid “mobilising advance” (MA) to contractors of Krishna Phase-lll in undivided Andhra Pradesh to help contractors purchase equipment and hire workers. The Board paid around Rs 154 crore (10 per cent of the cost) as advance, under political pressure, though there was no need to do so.
The Vigilance report also identified other issues. The contractors who were paid the advances were supposed to complete the work by March 2014, but it took a year longer and there were no accounts of the advances paid.
The V & E department found that the MA was given in two parts — for procurement of labour and for purchase of heavy machinery.
It was observed that 80 per cent of the entire project cost was for purchase of pipes and as such there was no need to pay 10 per cent MA to contractors.
However, in spite of an alert note by the V&E department to the state government and Water Board stating that there was “no need” to issue a “Mobilizing Advance” and it was unavoidable, it should be restricted to 1 per cent of the contract.
However, the Board, under pressure, had issued 10 per cent MA. Mr M. Padmanabha Reddy, secretary of Forum for Good Governance, in a letter to the chief secretary of Telangana, stated that as per the agreement clause 85, “ the contractor is eligible for advance mobilization loan up to 10 per cent of the value of contract. When the word used is ‘up to 10 per cent’, even 1 per cent can be given without attracting legal complications. The Water Board’s reply to the government stated that 10 per cent MA was paid to contractors and the completion date may be delayed and Hyderabad may not get drinking water by March 2014. But even after giving 10 per cent MA, the work could not be completed, the remaining 45 MGD needs to be released (currently the city is getting 45 MGD of Krishna Phase lll, Stage One)”.
The V & E report noticed that the Board had hurriedly borrowed money from The Housing and Urban Development Corporation (HUDCO) at 12 per cent interest and paid interest free MA to the contractors against the rules.
The tender conditions of the Board are defective and drafted to help contractors, this was also brought to the notice of the MD, Water Board by V & E through the alert notice, but the Board justified by stating that this was the practice being followed by the Water Board for all projects.
In a reply to the state government, the Board has justified payment of the MA, mainly on three counts:
1. Tenders are already approved, at this stage going back may lead to legal complication;
2. The project has to be completed by March 2014, if tenders are canceled it may delay the project completion and not possible to give water by March 2014; and
3. Payment of 10 per cent mobilization advance is a regular practice in the Water Board and followed in Phase l & ll of the Krishna project.”