Andhra Pradesh to cancel controversial Polavaram tender

The lowest bidder is found not qualified for participating in bidding

By M Suchitra
Published: Tuesday 31 January 2012

It seems controversies over the mega Indirasagar Polavaram Irrigation Project in Andhra Pradesh’s west Godavari district will never end. The High Power Committee which reviewed the recommendations of the technical evaluation committee regarding tender bidding has concluded that that Southern Engineering Works (SEW) which turned out to be the lowest bidder is not eligible for the contract. Sources in state irrigation department indicate the government will call fresh tenders soon.

After postponing the tender calling process 17 times since 2007, the state government opened biddings in October last year. The Rs 4,717 crore contract is for constructing four components of the project: the spillway, the headworks (structure at the diversion point of a waterway), earth-and-rock-fill dam and excavation for the power house.  In response to the tender call, seven bidders participated in the bidding. The technical evaluation committee short-listed four companies for the next stage—price bidding. 

After the price bidding, SEW-led joint venture was recommended for the contract as it turned out to be the lowest bidder quoting Rs 4,122 crore—12. 6 per cent less than the value decided by the government. The tender was in the eye of a controversy when CGGC-Soma Joint Venture (JV), the second lowest bidder which quoted Rs 4,147 crore, moved the Andhra Pradesh High Court on October 21 alleging irregularities in bidding. The court asked the High Power Committee to review the recommendations of the technical evaluation committee and examine all the allegations made by the petitioner.

In fact, the technical evaluation committee too had disqualified the SEW-led consortium at first for not producing proper work experience certificates. As per the terms and conditions of the tender call, it’s stipulated that bidders should produce work experience certificates issued only by the Central or state government or government undertakings. But SEW produced certificates issued by two private organisations—Shree Maheswara Hydel Power Corporation Ltd, Madhya Pradesh and Malana Power Company Ltd, Kulu, Himachal Pradesh.

“This is not acceptable in government tenders. Even on previous occasions no such certificates have been entertained,” was the observation of the first draft of the minutes of the committee, which was leaked to the media. But this negative remark about SEW was deleted from the final draft of the minutes and SEW was included in the price bidding allegedly because of pressure from the higher ranks. It was also found later that   Patel Engineering, a member of SEW-led consortium, was blacklisted by the National Highway Authority of India for a year in May 2011 for financial illegalities.

The High Power committee while reviewing the capabilities of the bidders as directed by the court has now found out that besides not producing proper certificates; only 60 per cent of the works of Shree Maheswara Hydel Power Corporation was carried out by SEW. The remaining 40 per cent was done by another Andhra Pradesh based company. Moreover, to be eligible for the contract, the consortium should have done works worth Rs 2,250 crore in the past 10 years. But the value of the works done by it fell short of this amount.

Also, if foreign firms participate in the bidding, it should provide work experience certificate duly authenticated by the Indian Embassy in their country. CGGC, which is a partner in the joint venture with SOMA, is a China-based company, and UES, which is partner in the IL& FS Engineering-led consortium (fourth lowest bidder), is a Russian company. Though both the companies have provided properly authenticated work experiences, the correctness of these certificates was not verified as stipulated, points out M Venkateswara Rao, engineer-in-chief of Polavaram project in a communication to the S P Joshi, principal secretary, irrigation department, who is the convener of the High Power Committee.

“In the present conditions where the bidders are trading allegations one on the other, it’s desirable that the correctness of experience certificates submitted by the bidders up to the lowest bidder may be verified by deputing a special team of officers to the concerned countries to avoid further complications in processing of tenders,” adds Rao in his letter dated December 12.

The Andhra Pradesh government started the tender process of the Polavaram project in 2003. It had awarded the contract for building the spillway and rock-fill dam in 2005 and 2007. The works were to be completed in 2009 but only 32 per cent of the work had completed by then. That year the government cancelled the contracts due to the slow pace of work. The estimated cost of the entire project has escalated from Rs 10,247 crore in 2005 to Rs 16,511 crore in 2011.



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