New Delhi: The government is considering banning Progressive Constructions Ltd,or PCL, a firm run by the son of Congress Party Lok Sabha member Kavuru Samba Siva Rao, from bidding for contracts related to state-owned power projects after the Hyderabad-based firm delayed work on a crucial dam.
The government blames PCL for holding up the completion of Tehri Hydro Development Corp.’s (THDC) Koteshwar concrete dam in Uttarakhand, which then affected the work on the 400MW Koteshwar power project as well. The project plan includes a 97.5m-high concrete dam and a surface power house, with four units of 100MW each.
“After getting the contract (in August 2002) for building the Koteshwar dam, Progressive sub-contracted the work to Ritwik Constructions. There was no development on the work. THDC is now trying to complete the work on its own,” said a senior power ministry official, asking not to be named. “We may ban it from bidding for all government (power) project contracts.”
Snail’s pace: A file photo of Tehri Dam in Uttarakhand. The Koteshwar Hydroelectric Project, which is part of the 2,400MW Tehri hydro power complex, will now be ready only by 2010. Rajeev Dabral / Mint
Hydroelectric projects typically take an average of five years, but several of them have been delayed because of reasons as varied as late investment decisions, contractual and land acquisition problems, geological issues and natural calamities. India met a little less than half the target of 14,393MW set for additional hydropower generation in the 10th Plan (2002-07).
“The problem has been compounded by a lack of good contractors and poor documentation by utilities. Banning contractors is a bold step. If someone is penalized it will act as a deterrent for others provided that the charge is genuine,” said K. Ramanathan, an expert at The Energy Research Institute, a policy research organization.
Founded in 1966 by veteran parliamentarian Rao, who represents Andhra Pradesh’s Eluru constituency, PCL is now managed by his son Bhaskar Rao. Questions emailed to Progressive, Rao, and Srivani Mullapudi, the company’s joint managing director, weren’t answered. Ritwik Constructions couldn’t be reached for comment.
National Highways Authority of India, the highways regulator, recently axed PCL’s contracts for non-performance on the 55km Sunakhala–Ganjam highway project and encashing a bank guarantee of around Rs50 crore, as reported by Mint on 21 April.
The Rs334.52 crore project contract was awarded to PCL on 31 August 2002, and the work was expected to be completed within 45 months from the date of awarding the contract. Under the contract, PCL was paid a mobilization advance of Rs16.72 crore, which was released against the submission of a bank guarantee of an equivalent amount, the power ministry official said.
The Koteshwar Hydroelectric Project is part of the 2,400MW Tehri hydro power complex (of which work on 1,400MW is yet to be completed). It is located some 22 km below the Tehri dam, on the Bhagirathi river.
THDC, a joint venture between the Centre and the state, is executing work on the project at the “risk and cost” of the contractor, a process it defines as “investing whatever is required for the execution of the project and deducting that sum from the final payment to be made to the contactor.”
“In 2006-07, the work was affected by inadequate supply of construction materials—cement, steel. Owing to steep increase in prices, the contractor sought a price revision,” a THDC spokesperson told Mint in an e-mail reply. “THDC then decided to execute the work on risk and cost of the contractor as he was facing severe cash flow problems and failed to arrange materials. Work was almost standstill in March 2007. Since April, 2007, THDC is executing work at ‘risk and cost’ of the contractor as per the provisions of the agreement.”
The other bidders for the THDC project were Jaiprakash Industries Ltd, Hindustan Construction Co Ltd, Continental Construction Co Ltd, Patel Engineering Co Ltd in a joint venture with ASI-RCC Enc. of US, and Gammon India Ltd in alliance with M/s Backbone Projects Ltd.
The government had approved a cost of Rs1301.56 crore in April 2000 for the entire Koteshwar project. THDC expects the project to be commissioned in 2010.