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Updated: February 28, 2014 03:14 IST

CAG finds glaring irregularities in functioning of KRDCL

Special Correspondent
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The Comptroller and Auditor General (CAG) of India has found several irregularities in calling tenders and awarding works by Karnataka Road Development Corporation Ltd., (KRDCL) from 2008 to 2013. The watchdog also said the corporation completed only 86.47 km of roads as against the target of 404.67 km during this period.

In its report on pubic sector undertakings (PSUs) tabled before both Houses of the State legislature on Wednesday, the CAG said design changes after awarding the contracts, wrong estimates and failure to acquire land resulted in time and cost overrun in many cases. The design was changed from two-lane (7 mt) to intermediary lane (5.5 mt) for Package B of Mysore-Bantwal SH and additional works were awarded to the contractor after awarding the contract.

There was delay in completing works in Package C of Mysore-Bantwal SH, approach road to Mangalore airport and construction of grade separator at Harohali, Bidadi, as land was not acquired before awarding the contract. Wrong estimation in the detailed project report (DPR) resulted in cost escalation of Sagar-Pattagoppa bridge by Rs. 6.59 crore and a delay of three and a half years.

Curtaining competition

The CAG noted that fixation of high pre-qualification created entry barrier in phase bridges’ package and only three contractors qualified. Letters of intent/agreements were issued into without designs and drawings and bill of quantities.

Payments were made based on certification without checking measurements by KRDCL in violation of Government Orders. While 345 of the 496 bridges were completed in Phases II, III and IV, KRDCL did not levy liquefied damages of Rs. 13.26 crore, though the delay was attributable to contractors.

With regard to fixing concession (toll collection) periods in cases of PPP projects, the CAG said they were not determined on project-specific basis — traffic volume, projected traffic and levels of service. It said considering the net present value (NPV) of net operating income after tax of Rs. 208.15 crore, Rs. 61.01 crore and Rs. 616.51 crore for Wagdhari-Ribbanpally Road, Dharwad-Alnavar-Ramanagar Road and Chikkanayakanahalli-Tiptur-Hassan Road respectively, KRDCL should have fixed shorter concession period instead of 30 years.

Recommendations

KRDCL has also not put in place a two-tier monitoring system for projects as recommended by the Planning Commission. Since it was formed as an SPV, it should function accordingly, generating its own funds to achieve the objectives, the CAG recommended.

Estimates and designs of roads and bridges prepared by consultants should be evaluated independently before approval. An institutional mechanism for land acquisition should be adopted. Joint venture with private partners through a revenue sharing model should be explored.

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