Following allegations of arbitrary cost escalations by local media and activists in the Vidarbha region, the state government in March 2010 formed a one-man committee of ND Vadnere, former principal secretary of water resources, which was asked to probe irrigation projects commissioned by the Vidarbha Irrigation Development Corporation (VIDC) between 2006 and 2010.
The committee submitted its report in June 2010 in two parts. The first was on the Gosikhurd project and the second on 265 tenders issued in the four years which
were above 5% of the original tender costs. It found that in nearly 156 tenders, cost escalations were allowed in violation of government norms. The report, however, maintained silence on the total cost escalation in these projects.
“Overall, there is ambivalence and suspicion in the way VIDC officials have drawn up tender estimates and issued them,” states the report.
The report points to 10 main reasons for these cost escalations, including inflated material and transport costs, changing the scope of the project after tendering, hikes due to taxes like VAT, excise etc.
For instance, in 47 tenders, it found costs were hiked because of a change in the original scope and structure of the project. The cost was escalated without technical approvals as mandated by Maharashtra Public Works manual clause 313 and 315. The committee noted that project estimates and scope cannot be revised after tenders are issued.
In 56 other tenders, the committee noted that instead of sticking to material costs as mentioned in the scheduled rate card, rates of materials like cement and steel were derived, and seemed inflated. Vadnere observed that in these cases, government rules call for prior approval of the superintending engineer, after which the executive engineer can revise the cost. “However, in these tenders, no prior approval was taken and these costs were directly updated in the cost estimates. This is absolutely wrong,” noted the committee.
The government submitted a one-page action-taken report on this report, pointing to several reforms carried out by the water resources department, like not handing out of mobilisation advance, fixing guidelines for revising costs, and a proposed inquiry on the basis of the report.