Advocate General, finance department differ on Pulichintala project payment

Hyderabad: A controversy has kicked off over the payment of approximately Rs 283 crore to Pulichintala contractor as escalation charges, with the Advocate General opining in its favour, but the finance department is keen on following the report of a committee constituted by Governor E.S.L. Narasimhan, that opposed the payment.

In 2013, Seenaiah Company, contractor of Pulichintala project and promoted by former MLA Bollineni Krishnaiah, had sought Rs 214 crore from the state government as escalation charges as it has done 31 additional works.

The irrigation department approached the dispute arbitrator in this matter, who decided in the contractor’s favour. The then state government headed by N. Kiran Kumar Reddy issued orders on payment of Rs 214 crore to Seenaiah Company.

After Mr Reddy resigned, the matter went to the Governor and he constituted a three-member committee, headed by Ajeya Kallam, that opposed the payment of escalation charges, since the contract was given under the EPC.

The Governor left the decision to the new TD government, which again constituted a committee in this matter. The committee told the government to pay Rs 214 crore plus Rs 69 crore as interest from February 2013.

The government then referred this issue to the finance department, which opposed the payment.

The government later referred the file to the law department for its opinion, which favoured the payment to contractor since the arbitration was in favour and re-sent the file to the finance department. The department again opposed, saying the law department was silent about the three-member committee appointed by the Governor.