2,314% cost escalation, shoddy work, define national dam projects, finds CAG report

Initial costs of five national dam projects were ₹3,530 crore, but the current cost is ₹86,172 crore—a 2,341% escalation


Ashlin Mathew

A recently released audit by the Comptroller and Auditor General (CAG) of India shows that a number of projects at the Ministry of Water Resources, River Development and Ganga Rejuvenation under Nitin Gadkari are pending, the cost overrun is in the thousands of crores. Moreover, the power generation and drinking water supply from these projects have been zilch.

Sixteen projects were identified as major water resource development and irrigation projects in February 2008, but out of these, only five projects with estimated irrigation potential of 25.10 lakh hectares are under implementation. These five projects are:

  1. Gosikhurd project, Maharashtra
  2. Teesta project, West Bengal
  3. Saryu project, Uttar Pradesh
  4. Indira Sagar Polavaram project, Andhra Pradesh and
  5. Shahpur Kandi project, Punjab

Of these, March 2015 was the deadline for Shahpur Kandi and Teesta projects and March 2016 for the Saryu project. For the remaining two projects, 2019 is the expected year of completion. The other 11 projects are in various stages of approvals still.

When these five projects were envisaged, the cost estimate was ₹3,530 crore, but the current cost is ₹86,172 crore, making that a whopping 2,341% escalation. The cost escalation in the five projects before their inclusion in the National Projects (NP) list was ₹32,802 crore.

Interestinly, since their inclusion as national projects, Indira Sagar Polavaram project and Gosikhurd project, have alone registered a cost escalation of ₹49,840 crore over the earlier escalation.

The Gosikhurd project in Maharashtra was included in the NP list in 2008 at a cost of ₹7,778 crore and now the revised estimate is ₹18,495 crore. In 2014, Indira Sagar Polavaram project was included in the list at an estimate of ₹16,010 crore, but now it has a revised estimate of ₹55,133 crore.

The increase in the cost without proportionate increase in the benefits adversely affects the economic viability of these projects measured by Benefit Cost Ratio (BCR). The BCR is defined as the ratio of annual additional benefit on account of irrigation to the annual cost of providing those benefits.

The initial cost of these five projects were ₹3,530 crore, but the current cost is ₹86,172 crore, making that a whopping 2,341% escalation

Earlier, this month Gadkari had clarified that politics and development were two separate issues and the reason behind the delay in release of funds to Andhra Pradesh for the Indira Sagar Polavaram project was “technical” rather than “political”. The cost of the project is ₹55,132.92 crore and it is a fully central-funded project. However, the Centre has released only ₹3,349.7 crore, but the total expenditure on it has already crossed ₹4,007.99 crore.

The CAG states that with the current state of work at the dam, the target completion date of June 2019 will not be achieved. “There’s a shortfall of 93% in head regulator (gates that admit water into the canal), 46% in connectivity, 41% in the main dam, 94 % in miscellaneous works and 8% in the main canal. With 41.19 % shortfall in main dam and 93.20 % shortfall in head regulators, it appears that target completion date of June 2019 may be difficult to achieve. Only 7.3 % of total project cost of ₹55,133 crore had been incurred so far,” states the report.

In case of the Shahpur Kandi dam project, Gadkari seems to have washed his hands off the project. Chief Minister Capt Amarinder Singh had asked him to fast-track the project as the centre-state funding pattern is in the ratio of 90:10. However, Gadkari asked him to speak to the PMO regarding the issue. It was envisaged to be completed in 2015, but there is a 63% shortfall in the progress of the construction of the main dam and 54% in the main canal.

In Maharashtra, until March 2017, work on the Gosikhurd project has been delayed by almost three to eight years due to non-availability of land, despite 19 works being awarded at a cost of ₹24.87 crore. The department did not even ascertain with revenue authorities the status of availability of land required for the works prior to awarding the work orders.

“Only ₹26.04 crore had been spent against the total project cost of ₹2,285.81 crore as of March 2017,” highlighted the CAG audit report. Despite having been built to improve irrigation and power generation, Gosikhurd is the only project where no irrigation potential has been outlined.

In Teesta project (West Bengal), the shortfall was 86 to 99% in four components of land, lining work, inspection paths and structures. Against project cost of ₹2,988.61 crore, expenditure is only ₹285.72 crore, making it to be 9.56%.

Negligible irrigation potential

In these five projects, 14.53 lakh hectare irrigation potential has been created but a mere 5.36 lakh hectare (37%) irrigation potential is being utilised. The remaining 11 projects with estimated irrigation potential of 10.48 lakh hectare are yet to commence and are at different stages of approval.

If one were to look at the irrigation potential of all the five projects, the Saryu Project alone accounts for 74% of the total irrigation potential actually created and it is negligible in the remaining four projects under implementation. “Further, no project except the Indira Sagar Polavaram project in Andhra Pradesh has been able to utilise more than 20% of the envisaged irrigation potential. The utilisation of created potential was low due to gaps in structures and connectivity of the projects,” says the CAG report, which was tabled in the Parliament on July 20, 2018.

Other discrepancies in construction

The CAG auditors have reported that those building these dams have not implemented the Command Area Development work for creation of final distributaries to ensure supply of water in the fields on an equal footing with the dam construction. This has lead to even more delays.

What is alarming is that defects have already appeared in the construction of the Gosikhurd project. Due to the sub-standard quality of lining works in the entire canal length, the canal lining developed cracks within one to two years after completion. “The water resources ministry stated in January 2018 that it planned to complete the entire lining by March 2018. Audit observed that completion by March 2018 seemed unlikely since 95% of the re-construction work was pending as of April 2017,” the report highlighted.

In case of both the Indira Sagar Polavaram project and Gosikhurd project, there will be submerged areas. However, in both the cases, only a minor percentage of families have been rehabilitated. In case of the former, more than 56% of the families in the Stage 1 of the project are still waiting to be rehabilitated. Nothing has been done yet for the families who will be affected by Stage 2 and 3 of the project. In case of the Gosikhurd project, the Ministry stated in January 2018 that the project affected persons were not ready to shift due to their own reasons. Is this a grim reminder of how successive governments have treated those affected by the Narmada dam?

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