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CAG report reveals irregularities in PMC’s LED street light project

The report submitted by CAG states that awarding of the work to the contractor was done without competitive bidding. Also, the irregularities with respect to design, built, fiance, operation and maintenance has been highlighted.

pune Updated: Aug 28, 2018 14:20 IST
Parth Welankar
Parth Welankar
Hindustan Times, Pune
CAG report,irregularities,PMC’s LED street light project
LED streetlamps on the flyover of Paud road in Pune.(HT FILE PHOTO)

The Pune municipal corporation’s ₹16 crore light-emitting diode (LED) smart street lighting project has been under the scanner for various reasons. The report submitted by the Comptroller and Auditor General (CAG) has highlighted fresh irregularities in the overall process of awarding the project.

The report submitted by CAG states that awarding of the work to the contractor was done without competitive bidding. Also, the irregularities with respect to design, built, fiance, operation and maintenance has been highlighted.

“After disqualifying three bidders in technical evaluation round, only a single bid was available for the next round which was financial evaluation. As per Central Vigilance Commission (CVC) guidelines, generally single bids or tenders are not acceptable in the first instance and re-tendering is required to be carried out,” said the CAG report.

If there is only one single bid after re tendering, there is a need for detailed justification to accept the single tenderer of single bid with approval from the competent authority. However, department carried out re-tendering and single financial bid was opened after the approval of the PMC commissioner, said the CAG report.

Besides the above mentioned claims, the CAG in its report have as well stipulated irregularities in few other steps viz. Non preparation of feasibility report/detailed project report and cash flow, non-obtaining of insurance policy, agreement was executed and payment was made to other agency than work awarded, opening the payment reserve fund account etc.

Responding to the claims highlighted by the CAG in its report, Shriniwas Kandul, chief superintendent of PMC electrical department said, “Although we are in possession of the CAG report, however, we won’t act immediately based on the claims of the CAG. PMC has already ordered an independent inquiry in the issue. We will take up every issue with PMC commissioner and would eventually respond to all allegations made by CAG.”

CAG spills the beans about LED project

Proposed net saving in electricity – 52 per cent

Year expenditure

2016-2017 ₹32.52 crore

2017-2018 ₹38.58 crore

Amount paid to contractor - ₹ 9 crore 87 lakh ( inspite of losses)

LED street light project in the limelight, for wrong reasons

Irregularities

1. Awarding of work without competitive bidding

2.Irregularities with respect to design, built, finance, operate and maintenance

3.The department carried out re-tendering and single financial bid was opened after the approval of the PMC commissioner, which were clear violations as per Central Vigilance Commission(CVC) guidelines

4.Irregularities in other steps - Non preparation of feasibility report/detailed project report and cash flow, non-obtaining the insurance policy, Agreement was executed and payment was made to other agency than work awarded, opening the payment reserve fund account, with verification of net worth of bank etc.

CAG reveals increase in expenditure on electricity post installation of LED lights

Proposed net saving in electricity – 52 per cent

Year electricity bill amount

2016-2017 ₹32.52 crore

2017-2018 ₹38.58 crore

Amount paid to contractor - ₹ 9 crore 87 lakh ( inspite of losses)

“Although we are in the possession of the CAG report, however, we won’t act immediately based on the claims of the CAG. The PMC has already ordered an independent inquiry on the issue” – Shriniwas Kandul, chief superintendent of PMC electrical department.

LED project fails to meet its purpose as electricity expenditure increases

The ambitious claims of the Pune municipal corporation ( PMC) of saving expenditure related to electricity through the LED smart street lighting project has fallen flat after the report by Comptroller and Auditor General (CAG) revealed that there has been an increase in PMC’s expenditure on electricity post the installation of LED lights.

The CAG report, a copy of which is with Hindustan Times, states that, “As per the agreement, the proposed net saving in electricity is 52 per cent, however, the expenditure of electricity on street light has increased from ₹32. 52 Crore in 2016-17 to ₹38.58 Crore in 2017-18. However, an amount of ₹9 Crore 87 lakh was paid on account of saving of electricity during the year 2017-18.”

This indicates that expenditure on electricity has not decreased as assessed by the department as well as developer, said the report.

The report added, “This resulted not only in depriving the purpose of saving in expenditure of electricity on street light but has also added extra burden to PMC on account of payment made to the developer.”

Responding to the CAG’s report, Shriniwas Kandul, chief superintendent of PMC electrical department said, “We have already ordered for a third party report from the College of engineering Pune on this issue. The report is expected to be out soon. While we do not completely reject CAG’s report, we will have to cross check the information with COEP’s report as well. However, if COEP report also states the same things, than we will introspect the matter,” said Kandul.

Kandul had earlier claimed that the corporation had paid ₹16 Crore to the private firm after the claim that the project would save energy, while the company had not submitted any proof of saving.

According to Kandul, “The company had not produced any official document as proof of savings. While the firm has claimed that they have installed 84,000 LEDs, they have not provided any details about the installations.”

The contractor, Tata Urban Infrastructure had however, refuted the allegations. Senior corporate communication officials from the company which is executing the project said, “Amidst the on going controversy, we have got in touch with the PMC commissioner Saurabh Rao and have explained our position on the issue. Rao has assured us to look into the matter personally.”

First Published: Aug 28, 2018 14:18 IST