Phumdi clearance by K Pro at Loktak Lake : CPWD norms deleted, says CAG report
Source: The Sangai Express

Imphal, July 01 2015 : The Central Public Works Department (CPWD) provisions, which were part of the draft agreement between Loktak Development Authority (LDA) and K Pro Infra Works Pvt Ltd for management of Phumdi in Loktak Lake were deleted in the final agreement, according to a CAG report.

Execution of work for management of phumdi in Loktak Lake began after the signing of an agreement between the LDA and the contractor (M/S K Pro Infra Works Pvt Ltd, New Delhi) in November 2009 .

The CAG report said that the interest free machinery advance paid to the contractor exceeded the contract provision by Rs 17.66 crore.

Interest free advance (equal to 10 pc of tendered value or 90 pc of the price of new plant and machinery) can be paid to the contractor.

File pic of phumdi being cleared at Loktak Lake

The contractor was to provide satisfactory evidence of the price of plant and machinery to the Project Director of LDA.

The advance was to be paid against bank guarantee (BG) and the machinery hypothecated to LDA.

As per provisions of the CPWD Works Manual, 2007, such advance can be paid against machinery that are required for the work and brought to the site by the contractor.

These CPWD provisions which were part of the draft agreement were deleted in the final agreement signed with the contractor, the CAG report said.

Audit records of the Project Director of LDA (Nov-Dec 2012) showed that based on the contractor's proposed list of machinery (Dec 2010) valued at Rs 26.79 crore, LDA paid interest free plant and machinery advance of Rs 22.40 crore in January 2011.However, only after six months, ie in June 2011, the contractor procured 25 trucks valued at Rs 5.27 crore and hypothecated them with LDA.

Thereafter, no machinery was procured, the report said.

As per the contract agreement, the amount of advance should have been restricted to Rs 4.74 crore.

The amount of advance paid exceeded the ceiling by Rs 17.66 crore.

The excess payment could have been avoided had the Department adhered to the CPWD norms, the CAG observed.

The report further said that a sum of Rs 21.17 crore was recovered from the contractor in May 2013, leaving a balance of Rs 1.23 crore to be recovered.

This outstanding advance is unsecured as LDA had already returned all the bank guarantees submitted by the contractor and there was no record of fresh BGs submitted to cover the outstanding amount.

Thus, the contractor was given undue benefit of interest free advance of Rs 17.66 crore which was inadmissible, the CAG observed.

The matter was referred to the Dept/Govt in August 2014.In response, the Dept/Govt admitted that the contractor had procured only 25 trucks valued at Rs 5.27 crore which was brought to the site in June 2011 .

The condition for payment of machinery advance as laid down in the CPWD manual was modified in the agreement due to 'special nature, importance and urgency of the work' .

The Dept also contended that the outstanding advance as of May 2013 was only Rs 78.29 lakh which would be recovered shortly.

The contention of the Dept regarding the amount of outstanding advance was not acceptable as there was arithmetical error in their statement and documents to support their claim were also not furnished, the CAG observed.

Moreover, the objective of modifying provision of CPWD manual in the agreement was also defeated as neither was the required machinery procured nor was there efficiency in execution of work as the contract had to be rescinded due to slow progress, the CAG report observed.