Irrigation projects in Konkan hit by contractor-babu nexus
Firms with same promoters, manpower allowed to bid as competitors and favoured by officials.mumbai Updated: Sep 06, 2012 01:22 IST
For a firm incorporated in 2006, FA Enterprises has seen a meteoric rise when it comes to bagging irrigation contracts. Within five years of its inception, by 2011, the firm had won irrigation contracts worth Rs 2,503 crore for the construction of the Kalu, Balganga, Kondhane, Susari, and Shai dams, all of which are being implemented by the Konkan Irrigation Development Corporation (KIDC).
FA Enterprises is a sister concern of FA Constructions. The firms have three common promoters - FM Khatri, NF Khatri and Mrs JFM Khatri.
While the Kondhane project was cancelled by the state government in June, the high court has stayed work on Kalu dam as the project does not have forest clearance. A majority of the projects are now under the scanner for cost escalations and other irregularities. A look at the tender evaluation process of these projects tells you why, even as it points to a nexus between officials and contractors.
Both FA Construction (FAC) and FA Enterprises (FAE) applied for the Kalu, Susari and Kondhane dams as competitors, even though they were sharing the same resource pool. For instance, FA Enterprises became financial eligible for bagging irrigation projects by showing a turnover Rs1190.5 crore from 2005 to 2010, which it did by considering 80% of the stake of its parent company.
“FA Enterprises was set up to bypass the KIDC norm that does not allow a single contractor to bag more than three projects. How can you share resources such as equipment, personnel, finances and even past experience of your competitor,” said Anjali Damania, an India Against Corruption volunteer who has exposed irregularities in several irrigation projects, including Kondhane.
During the tendering process of the Kalu dam in 2010, the KIDC tender norms said aligned firms – those that shared directors – could not apply for the same project. By 2011, for the Kondhane and Susari projects, this condition had been relaxed.
The two firms share 33 of the 38 employees – experienced engineers and supervisors – and have listed them separately to qualify in the personal adequacy criteria, and KIDC officials gave both firms 30/30 for this criteria while evaluating them for Kalu.
While evaluating their financial capability for Kalu, FAC, the parent firm, scored 19/30, while FAE scored 21/30. In the case of Susari project, both firms got 20 out of 15.
For Kondhane, FAE got the lowest marks (12/30) among all bidders for equipment adequacy and just 17/30 for financial capability, but it still bagged the project. Firms that get the qualifying marks go on to the next round, with the lowest bidder winning the contract.
Despite repeated calls and email, FA Constructions did not respond to our queries.