In an attempt the cut losses, the PSPCL has only increased its expenditure. It has agreed to pay more to private companies for what it can do for less on its own.
While the first part of Rs-300-crore Restructured Accelerated Power Development and Reforms Programme (RAPDRP) has run into controversies over allotment and poor implementation, in the second part, Punjab State Power Corporation Limited (PSPCL) has allotted a contract for Rs 1,600 crore, which is much higher than its own scheduled rates.
Confidential records of the PSPCL suggest that it inflated the contract by almost 25% in an attempt to adjust the tenders in the finalisation process. The schedule rates are the cost for which the PSPCL undertakes own work.
The RAPDRP is Centre-sponsored project to cut losses by augmenting the distribution system. The schemes covered towns with population above 30,000, and in Punjab, 47 towns being covered comprise nearly 20-lakh consumers. The PSPCL allotted the contract worth Rs 1,600 crore to three companies: Larsen and Turbo (L&T), A2Z Infrastructure and Godrej, on turnkey (delivering a location ready for occupation) basis.
Tenders are invited to save money by encouraging competition, but the PSPCL selected the firms that quoted a price 50 to 70% higher than its own scheduled rates.
PSPCL purchases a pillar box of 20 energy meters for Rs 10,000, while the companies have quoted a price of Rs 26,069 (160% more). PSPCL pays Rs 51,339 per kilometer for 11-KV underground cable for own works, while now it will have to pay Rs 6,57,187 (1,180% more).
Okayed 'under pressure'
"Everyone knew it was an unbalanced tender," said an official privy to the allotment process, requesting anonymity. "Two directors raised objection in the meeting of the board of directors but no one listened. Citing 'pressure', the top management asked them to pass it," the official added.
The work has been allotted without proper survey of its scope. "The survey is on, and we feel that the project cost will escalate to Rs 2,000 crore," said an official.
Information technology company SPANCO failed to implement the first part of the RAPDRP, which was a project worth Rs 300 crore roughly, and consumers face hardship.
Contract clubbed,competition killed
Part-B of the programme was to be in two parts: the 33 KV/66 KV transmission work on the one hand and the LT and 11-KV distribution work on the other hand.
In June 2010, the Powercom chairman and managing director (CMD) formed a core group for carrying out distribution reforms. It suggested that the tenders be called in two parts, separate for the 33 KV/66 KV transmission and 11KV distribution works, because experts said it would lower the cost.
The contractors for both works are different. In the 11-KV work, there is huge competition, as contractors are small. However, going against the majority, the CMD formed a new expert group of "select officials", who proposed that if the works were clubbed, it would lead to early execution and quality job, as only credible contractors will participate, "although PSPCL might incur extra expenditure".
The CMD okayed the proposal of "extra expenditure" and invited tenders. This ended competition in the 11-KV segment, where PSPCL could get a rebate of even 40%.
Neither cost,nor time saved
When the tender was put up before the board of directors, the quoted price was higher by almost 80% compared with the PSPCL scheduled rates. However, to pave way for the companies, PSPCL increased rates by an arbitrary 25% to soften the blow of enhancement and justify the rates. Why the PSPCL did so is still a question.
The second justification for clubbing the works was "early execution". The work is yet to start even after 21 months of floating the tender. Both purposes are defeated. The PSEB Engineers Association has written to the CMD about its objections.
"If the project was bifurcated, it would have cost almost 30% less. Now, PSPCL will pay 25% more. There is something doubious in deal, as already the RAPDRP's part-1 had failed and part-2 is in question before the work has even started," said Padamjit Singh, and electricity-sector expert.