Coastal road construction cost rose 405%, CAG questions why

The Comptroller and Auditor General has also flagged questions regarding expenditure worth ₹200 crore on Mumbai Coastal Road construction

The Comptroller and Auditor General of India (CAG), the country’s apex public expenditure auditing body, has questioned the Brihanmumbai Municipal Corporation (BMC) over a sharp increase in construction cost of the Mumbai Coastal Road Project (MCRP) from ₹252 crore per kilometre in 2011 to ₹1274 crore in 2018, a 405% rise. It has also raised questions over separate spends amounting to ₹200 crore in an inspection report between April 2016 and March 2020. The total expenditure in the latter part amounted to ₹2100 crore, of which ₹200 crore has been called into question.

The Comptroller and Auditor General of India (CAG), the country’s apex public expenditure auditing body, has questioned the Brihanmumbai Municipal Corporation (BMC) over a sharp increase in construction cost of the Mumbai Coastal Road Project (MCRP) from ₹252 crore per kilometre in 2011 to ₹1274 crore in 2018. (HT PHOTO)

The report was submitted to the BMC in July, 2021. HT accessed a copy.

In 2010, a 35-km coastal road was planned between Nariman Point in south Mumbai and Kandivli in the north of the city for smoother traffic movement. However, the project never took off for eight years. In October 2018, the BMC began constructing the 9-km-long first phase between Princess Street Flyover near Marine Drive and Worli which will take motorists up to Versova in suburban Mumbai via the Worli-Bandra sea link and the under-construction Bandra-Versova sea link.

Though construction began in October 2018, expenses piled up for nearly a decade owing to studies and the tendering process executed with the help of third-party consultants. The CAG scrutinised the civic body’s coastal road department’s expenditure between April 2016 and March 2020, and raised questions.

According to BMC officials, they corporation has been complying with the queries from the CAG from time to time. A senior official from the engineering department of the coastal road said, “There were several queries raised by the CAG as part of their inspection report. We have, from time to time, satisfactorily replied to the queries of the CAG. There is nothing more to be read in the same. We have been complying with the CAG’s requests.”

The report also questioned financial dealings of around ₹200 crore ranging from fine collection, non-recovery of penalties, loss of income from interest, excess/undue payment made to contractors and consultants.

One such expenditure was of ₹8.57 crore made by the BMC towards consultancy work for the coastal road, due condition in tender documents for consultancy, and not negotiating with the appointed consultant for the consultancy work.

In another instance, the CAG questioned a payment of ₹142 crore to contractors, despite there being a stay by the Bombay High Court between July 2019 and December 2019.

In its report, the CAG stated, “It is seen that the work was totally stopped during July 16, 2019 to January 01, 2020 and was again commenced on January 2, 2020. Thus, the contractor is not entitled for any payment for this period as work was stopped. However, scrutiny of bills paid to the contractor revealed the payments made ₹73.92 crore + ₹68.27 crore made which includes the payment for the period 16th July 2019 to 1st January 2020.”

It added, “MCGM (BMC) was asked to furnish justification for the same. In reply, MCGM stated that abiding by the court order the construction/physical work was not carried out. Only the work related to submissions relevant to preliminaries and design were continued during the site work stoppage period and the payment for design submissions was released. However, the reply is not acceptable as the coastal road work also includes design works which should have stopped as per the Bombay High court order.”

In another instance, the CAG stated that undue benefit was given to the contractor due to non-levying/withholding of penalty of ₹27.99 crore. The report said, “It could be seen that there is no uniformity in levy and recovery of penalty. It could be construed that the tender conditions envisaged were not proper because huge penalty charges (hypothetical) were enlisted, levied, but not recovered.”

Eight queries were raised in total by the CAG. BMC says it replied to some of the CAG’s queries, while some are under process. In some cases, a reply is awaited and in some, the CAG is not satisfied. Currently, the BMC has completed over 40% of the civil works for the over ₹12,000 crore project.