Report of the Comptroller and Auditor General of Indiapaggujarat.nic.in/Reports/Economic_sector_2016_English.pdfReport of the Comptroller and Auditor General of India on Economic Sector

Report of the

Comptroller and Auditor General of India on

Economic Sector

for the year ended 31 March 2016

Government of Gujarat Report No. 6 of the year 2016

Report of the Comptroller and Auditor General of India

on

Economic Sector for the year ended 31 March 2016

GOVERNMENT OF GUJARAT

(Report No. 6 of the year 2016)

http://www.cag.gov.in

i

T A B L E O F C O N T E N T S

Preface iii

CHAPTER I – INTRODUCTION

About this Report 1.1 1

Audited Entity Prole 1.2 1-2

Authority for Audit 1.3 2-3

Organisational structure of the Ofce of the Principal Accountant General (E&RSA), Gujarat

1.4 3

Planning and conduct of Audit 1.5 3

Signicant audit observations 1.6 3-8

Response of the Government to Audit 1.7 8-10

CHAPTER II – PERFORMANCE AUDIT

NARMADA, WATER RESOURCES, WATER SUPPLY AND KALPSAR DEPARTMENT

Water Conservation at Major and Medium Irrigation Projects in Saurashtra Region

2.1-2.13 11-29

CHAPTER III – COMPLIANCE AUDIT

INDUSTRIES AND MINES DEPARTMENT

Assistance under “Critical Infrastructure Project Scheme and Interest Subsidy under MSME Scheme”

3.1 31-42

PORTS AND TRANSPORT DEPARTMENT

Development of port sector in Gujarat through private participation (GMB)

3.2 42-51

ROADS AND BUILDINGS DEPARTMENT

Development of State Highways and Rail Over Bridges by DBFOT on Annuity basis

3.3 51-60

Blocking of fund on incomplete approaches of Railway over bridge

3.4 61-62

Extra expenditure 3.5 63-65

Particulars Paragraph Page

ii


Planning and execution of works relating to utilisation of one Million Acre Feet surplus ood water of the Narmada river for the Saurashtra Region

3.6 66-72

Poor planning and execution of Karjan Right Bank High Level Recharge Canal

3.7 72-75

Loss to the Government 3.8 75-76

Non-recovery of liquidated damages 3.9 76-78

Avoidable expenditure on contract demand 3.10 78-79

A P P E N D I C E S

Appendix No.

Subject Refer

Paragraph Page

I Year-wise breakup of outstanding Inspection Reports as on 30 September 2016

1.7.1 81

II Details showing the project wise CCA created and actually achieved during 2011-16

2.8.2 82-84

III Details of silt survey and siltation level in Medium Irrigation Projects in Saurashtra region

2.9.1.1 85

IV Details showing the lined and unlined canal networks of Medium irrigation project.

2.10.1 86-88

V Assistance given under Critical Infrastructure Project Scheme during 2009-15

3.1.3 and 3.1.3.1

89-90

VI Compliance to guidelines of the CIP Scheme by the Project Implementation Agencies

3.1.3.1 91-92

VII Status of Captive Jetty Agreements entered by GMB as on 31 March 2016

3.2.3 and 3.2.3.1

93

VIII Undue favour to existing Captive Jetty holders (March 2015) due to reduction of wharfage rates under SoPC 2012

3.2.3.3 94

Particulars Paragraph Page

iii

PREFACE

This Report for the year ended March 2016 has been prepared for submission to the Governor of Gujarat under Article 151 of the Constitution of India.

This Report relates to audit of the Economic Sector of the Government Departments conducted under the provisions of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 and Regulations on Audit and Accounts, 2007 issued thereunder by the Comptroller and Auditor General of India. This report is required to be placed before the State Legislature under Article 151 (2) of the Constitution of India.

The instances mentioned in this Report are among those, which came to notice in the course of test audit for the period 2015-16 as well as those which had come to notice in earlier years, but could not be reported in previous Audit Reports; instances relating to the period subsequent to 2015-16 have also been included wherever necessary.

Audit has been conducted in conformity with the Auditing Standards issued by the Comptroller and Auditor General of India.

iv

CHAPTER-I

INTRODUCTION

1

CHAPTER I

INTRODUCTION

1.1 About this Report

This Report of the Comptroller and Auditor General of India (C&AG) presents matters arising from Performance Audit and Compliance Audit of the departments of the Government of Gujarat in the Economic Sector.

The Compliance Audit refers to examination of the transactions relating to expenditure of the audited entities to ascertain whether the provisions of the Constitution of India, applicable laws, rules, regulations and various orders and instructions issued by competent authorities are being complied with. On the other hand, performance audit, besides conducting a compliance audit, also examines whether the objectives of the programme/ activity/ Department are achieved economically and efciently.

The primary purpose of the Report is to bring to the notice of the State Legislature, important results of audit. Auditing Standards require that the materiality level for reporting should be commensurate with the nature, volume and magnitude of transactions. The audit ndings are expected to enable the Executive to take corrective actions to frame policies and directives that will lead to improved nancial management of the organisations, thus, contributing to better governance.

This chapter explains the planning and extent of audit, provides a synopsis of the signicant audit observations made during various types of audits and also briey analyses the follow-up on the previous Audit Reports. Chapter-II contains Performance Audit of “Water Conservation at Major and Medium Irrigation Projects in Saurashtra Region” of Water Resources (WR) Department of Government of Gujarat (GoG). Chapter-III contains Compliance Audit which includes one theme based audit namely ‘Assistance under Critical Infrastructure Project Scheme and Interest Subsidy Incentive under MSME Scheme given by the ofce of the Industries Commissioner” under Industries and Mines Department and nine individual audit paragraphs on the expenditure transactions of the Government Departments.

1.2 Audited Entity Prole

The Principal Accountant General (Economic & Revenue Sector Audit), Gujarat conducts audit of the expenditure incurred by the ten Departments rendering Economic Services in the State through their eld formations, 53 autonomous bodies and 70 public sector undertakings (PSUs) falling under the jurisdiction of these ten Departments. Each Department is headed by Additional Chief Secretary/ Principal Secretary/ Secretary, who are assisted by Directors/ Commissioners/ Chief Engineers and subordinate ofcers under them.

Audit Report (Economic Sector) for the year ended 31 March 2016 - Report No. 6 of 2016

2

The summary of scal transactions of the Government of Gujarat during the year 2014-15 and 2015-16 is given in Table 1:

Table 1: Summary of scal operations (` in crore)

Receipts Disbursements

Particulars 2014-15 2015-16 Particulars 2014-15 2015-16

Non- Plan Plan Total Section-A: Revenue

Revenue receipts

91,977.78 97,482.58 Revenue expenditure

86,651.71 63,554.46 32,224.08 95,778.54

Tax revenue 61,339.81 62,649.41 General services

30,003.32 31,512.36 1,363.69 32,876.05

Non-tax revenue

9,542.61 10,193.52 Social services

36,714.15 21,620.77 20,499.13 42,119.90

Share of Union taxes/ duties

10,296.35 15,690.43 Economic services

19,398.68 9,862.60 10,361.26 20,223.86

Grants from Government of India

10,799.01 8,949.22 Grants-in-aid and Contributions

535.56 558.73 -- 558.73

Section-B: Capital

Misc. Capital receipts

241.00 0.00 Capital Outlay

24,157.76 76.43 24,093.01 24,169.44

Recoveries of Loans and Advances

621.38 125.46 Loans and Advances disbursed

349.90 56.19 619.60 675.19

Public Debt receipts*

19,453.94 23,486.19 Repayment of Public Debt*

5,509.20 -- -- 6,194.26

Contingency Fund

0.11 14.16 Contingency Fund

14.16 -- -- 3.75

Public Account receipts

62,387.52 65,131.92 Public Account disbursements

52,309.01 -- -- 61,936.12

Opening Cash Balance

15,386.48 21,076.47 Closing Cash Balance

21,076.47 -- -- 18,559.48

Total 1,90,068.21 2,07,316.78 1,90,068.21 132.66 24,712.61 2,07,316.78

Source: Finance Accounts of the respective years. * Excluding net transactions under ways & means advances and overdrafts.

1.3 Authority for Audit

The authority for audit by the C&AG is derived from the Articles 149 and 151 of the Constitution of India and the Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971. The C&AG conducts audit of expenditure of the Departments of the Government of Gujarat under Section 131 of the C&AG's (DPC) Act. The C&AG is the sole auditor in respect of bodies/ authorities which are audited under Sections 19(2)2, 19(3)3 and 20(1)4 of the C&AG's (DPC) Act. In addition, the C&AG also conducts

1 This section empowers C&AG to audit transactions made from the Consolidated Fund of the State,

transactions relating to the Contingency Fund and Public Accounts, and trading, manufacturing, prot & loss accounts, balance sheets and other subsidiary accounts.

2 Audit of the accounts of Corporations (not being Companies) established by or under law made by the Parliament in accordance with the provisions of the respective legislations.

3 Audit of accounts on the request of the Governor in respect of Corporations established under law made by the State Legislature.

4 Where the audit of the accounts of any body or authority has not been entrusted to the C&AG by or under any law made by Parliament, he shall, if requested so to do by the Governor of a State, undertake the audit of the accounts of such body or authority on such terms and conditions as may be agreed upon between him and the Government.

Chapter I - Introduction

3

audit of other autonomous bodies, which are substantially funded by the Government under Section 145 of C&AG's (DPC) Act. Principles and methodologies for various audits are prescribed in the Regulations on Audit and Accounts, 2007 and the Auditing Standards and Guidelines issued by the C&AG.

1.4 Organisational structure of the Ofce of the Principal Accountant General (E&RSA), Gujarat

Ofce of the Principal Accountant General (Economic & Revenue Sector Audit), Gujarat conducts audit of Government Departments/ Ofces/ Autonomous Bodies/ Institutions under the Economic and Revenue Sector vide directions of the C&AG of India. The Principal Accountant General (Economic & Revenue Sector Audit) is assisted by one Senior Deputy Accountant General and three Deputy Accountants General.

1.5 Planning and conduct of Audit

Audit process starts with the assessment of risks associated with various Government activities based on expenditure incurred, revenue earned, criticality and complexity of activities, delegated powers and responsibilities, analysis of internal controls and stakeholders concerns. Previous audit ndings are also considered in this exercise. Based on this risk assessment, the frequency and extent of audit is decided.

After completion of audit of each unit, Inspection Reports containing audit ndings are issued to the heads of the Departments. The Departments are required to furnish replies to the audit ndings within one month of receipt of the Inspection Reports. Whenever replies are received, audit ndings are either settled or further action for compliance is advised. The important audit observations arising out of these Inspection Reports are processed for inclusion in the relevant Audit Reports, which are submitted to the Governor of the State under Article 151 of the Constitution of India.

During 2015-16, 5,433 man-days6 were utilised for compliance audit of Economic Sector Audit covering 118 units and performance audits. The audit plan covered units/ entities based on risk assessment.

1.6 Signicant audit observations

In the last few years, Audit has reported on several signicant deciencies in the implementation of various programmes/ activities through performance audits, as well as, on the quality of internal controls in selected Departments which impact the success of programmes and functioning of the Departments. Similarly, the deciencies noticed during Compliance Audit of the Government Departments/ organisations were also reported upon.

5 This section empowers the C&AG to audit receipts & expenditure of (i) a body/ authority

substantially nanced by grants or loans from the Consolidated Fund of the State and (ii) any body or authority where the grants or loans to such body or authority from the Consolidated fund of the State in a nancial year are not less than ₹ one crore.

6 Inclusive of the party days provided for the audit of PSUs. The related audit ndings have been included in the Audit Report on PSUs separately.


4

The present Report contains one performance audit and 10 compliance audit paragraphs (including one theme based audit ) pertaining to the

& Mines Department, Ports & Transport Department, Roads and (R&B) Department and Narmada, Water Kalpsar (NWRWS&K) Department.

1.6.1 Performance Audit

Chapter II of this report contains Performance Audit observations relating to “Water Conservation at Major and Medium Irrigation Projects in Saurashtra Region” of Water Resources (WR) Department of GoG.

“Water Conservation at Major and Medium Irrigation Projects in Saurashtra Region” of Water Resources (WR) Department

Gujarat State had to face frequent droughts due to scanty and erratic rainfalls since ground water resources were limited. The distribution of water resources within Gujarat is uneven with Central and South Gujarat regions accounting for 69 per cent, North Gujarat 11 per cent, Saurashtra 17 per cent and Kachchh three per cent of water resources. There were 19 major and 77 medium irrigation projects in the State as a whole. The Government has constructed six major and 56 medium irrigation projects in Saurashtra region to augment water resources with aggregate storage capacity of 972.11 million cubic meters (Mcum) and 1,361.60 Mcum respectively. Total irrigated area covered under these 62 projects was 2.86 lakh hectares (ha).

A performance audit (PA) covering the period from April 2011 to March 2016 was carried out to see whether the policy framed was adequate to undertake water conservation activities, effective mechanism was adopted for identication of water losses/ wastages and water conservation works were executed in a time bound manner, and modern technologies were adopted and impact assessment were carried out.

The Government of Gujarat (GoG) brought out (February 2015) the State Water Policy, which laid down strategies and action plans required to be prepared for water conservation activities. Prior to framing of State Water Policy, 2015, there was no long term plan and time frame for water conservation in irrigation projects. Instead, the Department took up water conservation works mainly through canal lining and desilting of dam reservoirs in a piecemeal manner. Consequently, water conservation works remained unexecuted or partly executed thereby not achieving the optimum benets.

The Culturable Command Area (CCA) achieved for irrigation of land was only 67,594 ha against the 2,87,222 ha created CCA under 53 Irrigation Projects during the years 2011-12 to 2015-16 which indicated sub-optimal performance in water conservation activities.

The GoG neither followed Central Water Commission (CWC) guidelines on silt surveys nor issued its own guidelines prescribing inter alia, periodicity for conducting silt survey. Silt surveys had not been carried out since 2010 in the

IndustriesBuildings

Resources, Water Supply and


5

case of major irrigation projects and 2003 in the case of medium irrigation projects.

In 19 irrigation projects, desilting work remained incomplete during the period covered under audit. Delays in nalisation of tenders and subsequent award of works led to shortfall in execution of quantities awarded for desilting. As against 25,06,940 cum and 18,89,509 cum of desilting quantities awarded during the year 2012-13 and 2014-15, quantities of 16,64,742 cum (66 per cent) and 7,29,593 cum (39 per cent) could only be completed by the contractors. Priority was not given to the desilting works where dams were overowing. Instead, desilting works were carried out in six other irrigation projects where canal network was not ready.

Sixteen canal lining works in six irrigation projects could not be taken up due to pending administrative process. Priority was not accorded to four irrigation projects for canal lining resulting in water losses as high as 25 to 35 per cent. The lining works taken up were executed in patches as a result designed ow could not be achieved.

Maintenance and repair of canals was inadequate in eight irrigation projects. In 17 irrigation projects, the canal gates/ aqueducts/ canal siphon either did not exist or were damaged. Further, there was no locking system of gates for head regulators, cross regulators and direct outlets in 74 per cent of the irrigation projects in Saurashtra region.

Water measuring devices were not installed in 56 irrigation projects. As a result, release of water could not be controlled and monitored in those projects. Water audit was not conducted in any of the projects except in Bhadar Irrigation Project. Consequently, the Department failed to take remedial measures for improving the water storage efciency of dams and canal networks in Saurashtra region.

1.6.2 Compliance Audit

Principal Accountant General (E&RSA) conducted compliance audit of ten Departments in the Economic Sector of the State Government and their eld ofces and audit ndings were reported to the respective Heads of the Departments through inspection reports. Chapter III of this report contains Department wise audit ndings including one theme based audit paragraph on “Assistance under Critical Infrastructure Project Scheme and Interest Subsidy Incentive under MSME Scheme” under the Industries and Mines Department and nine individual paragraphs having signicant audit ndings relating to loss to the Government, extra expenditure and avoidable expenditure aggregating to ` 684.55 crore as narrated below.


6


Assistance under “Critical Infrastructure Project Scheme and Interest Subsidy Incentive under MSME Scheme ”

Audit analysed the procedure of assistance given under the scheme for assistance to Critical Infrastructure Project (CIP Scheme) and Interest Subsidy Incentive given under the scheme for assistance to Micro, Small and Medium Enterprise (MSME Scheme) under the Industrial Policy 2009 for the period from 2009-10 to 2014-15 by the Industries Commissioner (IC). The assistance/ incentive given under the above two schemes covered 80.40 per cent of the expenditure incurred by the GoG for assistance and incentives given to industries under the Industrial Policy 2009.

In the CIP Scheme an instance of sanctioning extra assistance to implementing agency due to splitting of contract and instances of excess assistance to three implementing agencies in violation of CIP Scheme guidelines were noticed. Further, the monitoring by the IC was ineffective, for instance, it released excess grant to Gujarat Industrial Development Corporation and did not ask for periodic submission of project details. Seven implementing agencies test checked, did not comply with the majority of terms and conditions of the scheme. Review of the interest subsidy incentive to MSME sector also revealed decient monitoring by the IC and District Industries Centres leading to violation of scheme guidelines, grant of assistance to ineligible beneciaries, delays in processing of applications/ claims and double payments.

(Paragraph 3.1)

PORTS AND TRANSPORT DEPARTMENT

Audit focussed on the transactions for the period from April 2013 to March 2015 in case of captive jetties, existing private ports and upcoming ports wherein commencement of cargo operation is still pending. An audit of the captive jetty agreements revealed that cost verication had been delayed leading to excess grant of rebate amounting to ₹ 96.90 crore and an undue benet of ₹ 182.39 crore was extended to existing captive jetty holders in the Schedule of Port Charges (SoPC) 2012.

In respect of private ports dual benet had been extended to Gujarat Adani Port Limited by allowing both lower tariff rates and capital cost reimbursement in respect of Wandh Coal Terminal, which resulted into revenue loss of ₹ 7.42 core during 2015-16.

(Paragraph 3.2)

Development of port sector in Gujarat through private participation

(GMB)


7


Roads and Buildings Department (R&BD) initiative (between September 2010 and July 2011) to allow private participation in the road sector on DBFOT- Annuity basis enabled it to timely open the services of newly developed four Railway Over Bridges (ROB) and 350 kilometres of State Highways (Estimated total project cost of ₹ 892.17 crore) to the public between May 2013 and October 2014. The Audit was conducted from January to April 2016 and observations were made on the implementation of the Concession Agreement (CA) and the agreement with the Independent Engineer (IE).

Audit noticed deciencies relating to non-appointment of IE for a long period, deciency in providing of project facilities and decient plantation along the project roads. Further, other lacunae such as excess payments to Concessionaires, non-recovery of sharable cost from Railways in case of ROBs and avoidable expenditure on structures having a total nancial implication of ` 3.82 crore were observed.

(Paragraph 3.3)

Delay in construction of approach road to the railway over bridge due to belated action in acquisition of land led to non-use of constructed bridge and resulted in blocking up of ₹ 20.42 crore.

(Paragraph 3.4)

Due to non-adherence to provisions of Gujarat Public Works Department Manual and lack of co-ordination in submission of structural designs by the R&BD and the consultant, the works remained incomplete for more than ve years leading to extra expenditure of ₹ 26.44 crore without achieving intended facilities.

(Paragraph 3.5)


Planning and execution of works relating to utilisation of one Million Acre Feet surplus ood water of the Narmada River for the Saurashtra Region.

The works of Phase I of Saurashtra Narmada Avtaran Irrigation (SAUNI) Yojana was taken up without ensuring actual water availability of 147.04 cumecs (including 8.33 cumecs for Goma Sukhbhadar Lift Pipeline Project (GSLPP)). Though the Sardar Sarovar Narmada Nigam Limited (SSNNL) declined to enhance the capacity of Morbi Branch Canal (MBC) and Botad Branch Canal (BBC) and agreed to provide only 110 cumecs water, the Water Resources Department (WRD) awarded the consultancy services for preparation of Detailed Project Report on the presumption that 138.71 cumecs water would be available. This led to increase in the project cost of works of Phase I due to excess capacity created. The SAUNI Yojana was planned as far back as 2008. The GSLPP was approved in October 2011 and work


8

commenced in April 2012. Thus, with comprehensive planning, the GSLPP could have been limited to the off take from Link 4 and more than ₹ 74.62 crore could have been saved. In addition, estimated amount of ₹ 4.54 crore per annum required for electricity could have also been avoided.

(Paragraph 3.6)

Poor planning and execution of Karjan Right Bank High Level Recharge Canal. The execution of the project was delayed due to i) failure to process forest clearance in time, ii) delay in acquisition of private land, iii) delay in approval of design and iv) poor planning regarding off take of water. As a result, the intended benets of providing water at higher altitudes have not been met despite incurring expenditure of ` 4.15 crore.

(Paragraph 3.7)

Decision of the Department to delete standard tender Clause 59A relating to price adjustment led to loss to the exchequer to the extent of ₹ 2.41 crore due to continuous decrease of Reserve Bank of India wholesale price index (WPI) for cement.

(Paragraph 3.8)

Failure of the Concessionaire to adhere to the approved specications in providing steel liner led to non-recovery of liquidated damages of ` 1.45 crore despite delay in the project execution by the Concessionaire.

(Paragraph 3.9)

Inefcient use of electrical energy in operation of Botad pumping station led to avoidable payment of ₹ 6.84 crore on contract demand charges.

(Paragraph 3.10)

1.7 Response of the Government to Audit

1.7.1 Inspection Reports

The Hand Book of Instructions for prompt Settlement of Audit Objections/ Inspection Report issued by the Finance Department, GoG in 1992 provides for prompt response by the Executive to the Inspection Reports (IRs) issued by the Accountant General (AG) to ensure rectifying action in compliance with the prescribed rules and procedures and x accountability for the deciencies, omissions etc., noticed during the inspections. The Heads of Ofces and next higher authorities are required to comply with the observations contained in the IRs, rectify the defects and omissions promptly and report their compliance to the AG within four weeks of receipt of the IRs. Periodical reminders are issued to the Heads of the Departments requesting them to furnish the replies expeditiously on the outstanding paragraphs in the IRs.

Ten Audit Committee meetings were held during the year 2015-16 in respect of paragraphs contained in IRs pertaining to Economic Sector Departments. As of 30 September 2016, 609 IRs (2,056 paragraphs) were outstanding


9

against 10 Departments under the Economic Sector. Year -wise details of IRs and paragraphs outstanding are given in Appendix I.

1.7.2 Performance Audit and Draft Paragraphs

One Performance Audit, one theme based audit Paragraph and nine Paragraphs were forwarded to the Principal Secretaries/ Secretaries of the concerned Departments between April and August 2016 with a request to send their responses within six weeks. The WR Department has not replied (September 2016) to the Performance Audit of “Water Conservation at Major and Medium Irrigation Projects in Saurashtra Region”. Exit conference was also held with the concerned Department in September 2016 on the audit ndings included in the Performance Audit Report.

Out of 10 draft paragraphs (including one theme based audit), replies to seven individual draft paragraphs (one relating to Ports and Transport Department, four relating to WR Department and two of R&B Department) have been received up to October 2016. The replies of the Departments and their response have been duly considered while nalising this Report.

1.7.3 Follow up of Audit Reports

Rule 7 of Public Accounts Committee (PAC) (Rules of Procedure) 1990 provides for furnishing Detailed Explanation (DE) by all the Departments of Government to the observations which featured in Audit Reports within 90 days of their being laid on the Table of the Legislative Assembly. These DEs are required to be furnished to the PAC after showing the same to the concerned Accountant General.

The Audit Reports for the year 2011-12, 2012-13, 2013-14 and 2014-15 were placed in the Gujarat Legislative Assembly in April 2013, July 2014, March 2015 and March 2016 respectively which included 45 paragraphs pertaining to seven Departments as detailed in Table 2 below:

Table 2: Details of paragraphs included in Audit Reports

Sl. No.

Name of the Department

2011-12 2012-13 2013-14 2014-15 Total DEs received

1 Agriculture & Co-operation

1 0 1 0 2 0

2 Narmada, Water Resources, Water Supply & Kalpsar (Water Resources)

3 6* 3* 5* 17 12

3 Ports & Transport 0 1 0 0 1 1 4 Roads & Buildings 5 4 5 3 17 10 5 Forests & Environment 0 0 1 3* 4 1 6 Industries & Mines 0 0 0 2 2 0 7 Finance Department 0 0 0 2 2 0 Total 9 11 10 15 45 24

* One paragraph pertains to two Departments hence considered as separate paragraph in each Department.


10

Out of 45 paragraphs for the year 2011-12 to 2014-15, DEs for 24 paragraphs have been received up to September 2016 and no DEs for 21 paragraphs for the year 2011-12 (two paragraphs), 2013-14 (ve paragraphs) and 2014-15 (14 Paragraphs) have been received as of September 2016.

CHAPTER-II

PERFORMANCE AUDIT

11

CHAPTER II

PERFORMANCE AUDIT


2 Water Conservation at Major and Medium Irrigation Projects in Saurashtra Region

Executive summary

Gujarat State had to face frequent droughts due to scanty and erratic rainfalls since ground water resources were limited. The distribution of water resources within Gujarat is uneven with Central and South Gujarat regions accounting for 69 per cent, North Gujarat 11 per cent, Saurashtra 17 per cent and Kachchh three per cent of water resources. There were 19 major and 77 medium irrigation projects in the State as a whole. The Government has constructed six major and 56 medium Irrigation Projects in Saurashtra region to augment water resources with aggregate storage capacity of 972.11 million cubic meters (Mcum) and 1,361.60 Mcum respectively. Total irrigated area covered under these 62 projects was 2.86 lakh hectares (ha).

A performance audit (PA) covering the period from April 2011 to March 2016 was carried out to see whether the policy framed was adequate to undertake water conservation activities, effective mechanism was adopted for identication of water losses/ wastages and water conservation works were executed in a time bound manner, and modern technologies were adopted and impact assessment were carried out.

The Government of Gujarat (GoG) brought out (February 2015) the State Water Policy, which laid down strategies and action plans require d to be prepared for water conservation activities. Prior to framing of State Water Policy, 2015, there was no long term plan and time frame for water conservation in irrigation projects. Instead, the Department took up water conservation works mainly through canal lining and desilting of dam reservoirs in a piecemeal manner. Consequently, water conservation works remained unexecuted or partly executed thereby not achieving the optimum benets.

The Culturable Command Area (CCA) achieved for irrigation of land was only 67,594 ha against the 2,87,222 ha created CCA under 53 Irrigation Projects during the years 2011-12 to 2015-16 which indicated sub-optimal performance in water conservation activities.

The GoG neither followed Central Water Commission (CWC) guidelines on silt surveys nor issued its own guidelines prescribing inter alia,


12

periodicity for conducting silt survey. Silt surveys had not been carried out since 2010 in the case of major irrigation projects and 2003 in the case of medium irrigation projects.

In 19 irrigation projects, desilting work remained incomplete during the period covered under audit. Delays in nalisation of tenders and subsequent award of works led to shortfall in execution of quantities awarded for desilting. As against 25,06,940 cum and 18,89,509 cum of desilting quantities awarded during the year 2012-13 and 2014-15, quantities of 16,64,742 cum (66 per cent) and 7,29,593 cum (39 per cent) could only be completed by the contractors. Priority was not given to the desilting works where dams were overowing. Instead, desilting works were carried out in six other irrigation projects where canal network was not ready/ water inow was poor.

Sixteen canal lining works in six irrigation projects could not be taken up due to pending administrative process. Priority was not accorded to four irrigation projects for canal lining resulting in water losses as high as 25 to 35 per cent. The lining works taken up were executed in patches as a result designed ow could not be achieved.

Maintenance and repair of canals was inadequate in eight irrigation projects. In 17 irrigation projects, the canal gates/ aqueducts/ canal siphon either did not exist, were damaged, or not in working condition. Further, there was no locking system of gates for head regulator, cross regulator and direct outlets in 74 per cent of the irrigation projects in Saurashtra region.

Water measuring devices were not installed in 56 irrigation projects. As a result, release of water could not be controlled and monitored in those projects. Water audit was not conducted in any of the projects except in Bhadar Irrigation Project. Consequently, the Department failed to take remedial measures for improving the water storage efciency of dams and canal networks in Saurashtra region.

2.1 Introduction

Gujarat State had to face frequent droughts due to scanty and erratic rainfalls since ground water resources were limited. The distribution of water resources within Gujarat is uneven with Central and South Gujarat regions accounting for 69 per cent, North Gujarat 11 per cent, Saurashtra 17 per cent and Kachchh three per cent of water resources. Against the average annual rainfall of 1,107 millimetre (mm) in the State, Saurashtra receives an average annual rainfall of 578 mm only. Besides, though the State had eight perennial rivers, Saurashtra had none. Thus, Saurashtra has always been a water scarce area. There were 19 major and 77 medium irrigation projects in the State as a whole.

The Water Resources Department working under Narmada, Water Resources, Water Supply and Kalpsar (NWRWS&K) Department has constructed six major and 56 medium irrigation projects up to 2010 in Saurashtra region

Chapter II - Performance Audit

13

with aggregate storage capacity of 972.11 Mcum and 1,361.60 Mcum respectively. Total irrigated area covered under these 62 Major and Medium irrigation projects was 2.86 lakh hectares.

The main water conservation activities included desilting of dam reservoirs, providing lining to canals, ‘Extension, Renovation and Modernisation’ (ERM) of canals through re-sectioning, strengthening of canal embankment, maintenance and renovation of canal siphon and improvement of canal structure. Besides, maintenance and repair (M&R) of dams and canal networks through jungle cutting, clearing of silt in canals, servicing of Head Regulators (HR) and other regular M&R works were also undertaken.

2.2 Organisational Set up and Institutional Framework

Water Resources (WR) Department under the NWRWS&K Department, Government of Gujarat (GoG) is responsible for construction, operation and maintenance of Major and Medium Irrigation Projects in Gujarat, besides planning and execution of water conservation activities relating to these projects. WR Department is headed by a Secretary rank ofcer. The WR Department has ve regions1, each headed by a Chief Engineer and Additional Secretary (CE&AS). These ve CE&AS have administrative control over the execution of works in 134 divisions falling under the ve regions of the State.

Under the CE&AS (Saurashtra), there are four circles2 and 16 Divisions headed by Superintending Engineers (SEs) and Executive Engineers (EEs) respectively. EEs are responsible for operation and maintenance of 62 Major and Medium Irrigation Projects including water conservation activities.

Further, the following regulatory institutions were established to ensure maximum efciency in the use of water and avoid wastages.

· Gujarat Water Regulatory Authority (GWRA) was established (February 2012) to ensure equitable access of water for all, its fair pricing for drinking purpose, reward conservation and other uses.

· Gujarat State Water Mission was established (January 2014) to act as a nodal agency for achievement of objectives of water conservation, minimisation of wastages and ensuring its equitable distribution in the State.

2.3 Expenditure on Water Conservation

The EE in-charge of the Irrigation Projects at the divisional level prepares the plans and estimates for the works relating to water conservation. These plans and estimates are later approved at the levels of SE, CE&AS and Government as per the delegation of nancial powers under Gujarat Financial Powers

1 Central Gujarat, Kachchh, North Gujarat, South Gujarat and Saurashtra. 2 (i) Bhavnagar Irrigation Project Circle (BIPC), Bhavnagar, (ii) Rajkot Irrigation Circle (RIC),

Rajkot (iii) Rajkot Irrigation Project Circle (RIPC), Rajkot and (iv) Salinity Ingress Prevention Circle (SIPC), Rajkot.


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(Delegation) Rules, 1998. The funds required for the activities are projected in the budget proposals.

The actual expenditure incurred against the budget allotment during 2011-12 to 2015-16 under two major heads (MH) of ERM and Augmentation of surface water for Saurashtra Region which consisted of activities like dam and canal desilting, canal lining works etc., are shown in Table 1 below:

Table 1: Expenditure incurred during 2011-16

(` in crore)

Year MH: 4700 ERM MH: 4701 ERM MH: 4701, Augmentation of surface water

Allotment Expenditure Allotment Expenditure Allotment Expenditure 2011-12 1.25 1.25 9.49 9.46 3.80 3.70

2012-13 15.32 15.32 21.76 21.64 12.32 11.93

2013-14 8.50 8.50 51.71 51.65 16.85 16.48

2014-15 3.09 3.09 29.94 29.82 3.54 3.12

2015-16 1.60 1.60 13.87 13.76 5.91 5.85

Total 29.76 29.76 126.77 126.33 42.42 41.08

(Source: Information furnished by the Department).

There was no separate budget head for water conservation. Funds were allotted for water conservation activities under the above two heads in the budget. During the period 2011-12 to 2015-16, out of a total allocation of ₹ 156.53 crore under ERM, Department completed canal lining works valued at ` 103.87 crore (66 per cent). This included canal lining works in three Major Projects3 at a cost of ` 59.93 crore and in 19 Medium Projects4 at a cost of ` 43.94 crore.

Similarly, out of a total allocation of ₹ 42.42 crore under ‘Augmentation of surface water recharge’, the department incurred an expenditure of ₹ 25.32 crore (60 per cent) during the period 2012-13 to 2015-16 on desilting of dams. Expenditure was not incurred during the year 2011-12.

2.4 Audit Objectives

With a view to assess the water conservation activities, audit undertook a Performance Audit (PA) on ‘Water conservation at Major and Medium Irrigation Projects in Saurashtra Region’ from July 2015 to March 2016 to assess whether:

· the policy framed was adequate to undertake water conservation activities and impact assessment were carried out;

3 Bhadar (` 40.17 crore), Machhu-1 (` 2.70 crore) and Shetrunji (` 17.06 crore). 4 Aji-3 (` 1.53 crore), Aji-4 (` 0.29 crore), Bhadar-2 (` 11.75 crore), Dhatarvadi-2 (` 1.43 crore),

Goma (` 7.05 crore), Hiran-2 (` 1.13 crore), Jhanjheshri (` 2.70 crore), Kharo (` 0.21crore), Limbadi Bhogavo-1 (` 0.14 crore), Moj (` 1.01 crore), Ozat-2 (` 1.20 crore), Phophal-1 (` 4.41 crore), Rajawal (` 0.16 crore), Sani (` 0.82 crore), Sukhbhadar (` 5.00 crore), Und-2 (` 1.19 crore), Vartu-2 (` 2.16 crore), Venu-2 (` 1.44 crore) and Wadhvan Bhogavo-1 (` 0.32 crore).


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· effective mechanism was adopted for identication of water losses/ wastages and water conservation works were executed in a time bound manner; and

· supervision and monitoring were effective.

2.5 Scope of audit and audit methodology

The performance audit covered the period from 2011-12 to 2015-16. An entry conference was held on 7 January 2016 with the Secretary, WR Department in which the scope, audit objectives and methodology for the conduct of the PA were explained. Audit examined the records relating to survey, desilting of dam reservoirs, canal lining works and maintenance and repairs related to water conservation activities maintained at the ofce of the CE & AS (Saurashtra), Gandhinagar, four circle ofces and 16 divisional ofces during July 2015 to March 2016. The audit ndings were reported to the State Government in August 2016. An exit conference was held on 27 September 2016 with the Secretary of the WR Department and their ofcials to discuss the audit ndings. The views expressed by them have been considered while nalising this report.

2.6 Audit criteria

The criteria adopted for the PA was benchmarked vis-à-vis provision contained in:

(i) Bombay Irrigation Act, 1879, Gujarat Irrigation and Drainage Act, 2013, Participatory Irrigation Management Act, 2007, relevant guidelines, circulars, resolutions and policies issued by GoG;

(ii) National Water Policy 2012, Guidelines issued by Central Water Commission, Government of India (GoI); and

(iii) Gujarat Budget Manual and Gujarat Treasury Rules.

2.7 Audit Findings

The audit ndings have been grouped under the following heads:

· Impact assessment, Policy and planning

· Identication of water losses and execution of water conservation works

· Maintenance and repairs of dam and canal structures

· Supervision and monitoring

2.8 Policy and Planning

2.8.1 Inadequate implementation of Policy and Planning

The National Water Policy was formulated by the Ministry of Water Resources of the Government of India with an objective to prepare a framework of laws for management and use of water and an action plan for achieving a unied national perspective. The rst National Water Policy was


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adopted in September, 1987. It was reviewed and updated in 2002 and later in 2012. As envisaged in the National Water Policy, GoG framed Gujarat State Water Policy in February 2015.

Prior to framing of State Water Policy, 2015, there was no long term plan and time frame for water conservation activities. In Saurashtra region, 61 out of 62 Irrigation projects (including six major irrigation projects) were constructed between 1953 and 2010 and thus, required extra focus on maintenance and repairs. In view of this, the Department needs to have a well dened policy and long term planning for water conservation.

Audit observed that in absence of long term planning and time frame, the Department took up water conservation works mainly desilting of dam reservoirs and canal lining works in a piecemeal manner. Consequently, water conservation works remained unexecuted or partly executed as discussed in Paragraph 2.9.1.1, 2.9.2.1, 2.9.2.2, 2.9.2.3 and 2.10.2. Thus, optimum benets could not be delivered to the farmers/ beneciaries.

The Government stated (August 2015) that the projects were designed as per the Central Water Commission’s guidelines, Government circulars and relevant International standards. In the exit conference (September 2016), CE&AS (Saurashtra) stated that annual plans were prepared every year for water conservation activities. However, long term plan for water conservation would be framed for ve to seven years.

2.8.2 Performance of Irrigation Projects

An irrigation Project is constructed with a view to provide irrigation in Culturable Command Area (CCA). Coverage of irrigation depends on inow of water in the dam reservoirs, adoption of water conservation measures, proper maintenance of canal networks, better irrigation management practices etc.

Audit observed inadequate conservation activities such as desilting of dam reservoirs at irregular intervals, carrying out of lining works in scattered manner and improper maintenance of canals and structures. Audit also observed that the average CCA achieved was only 67,594 ha against the CCA created for the irrigation of 2,87,222 ha of land under 53 Irrigation Projects5 during 2011-12 to 2015-16 (Appendix II). This indicated sub-optimal performance in the water conservation activities.

The Government stated (September 2016) that in Saurashtra, projects were kharif oriented and protective irrigation. Reservoir capacity was lled up only to the extent of 40 per cent. The gap between CCA created and achieved would be reduced by implementing “Saurashtra Narmada Avtaran Irrigation (SAUNI) Yojana”.

5 Six Major and 47 medium (excluding nine irrigation projects: 2-transferred to Sardar Sarovar

Narmada Nigam Limited, 4-under construction, 1-drinking water purpose, 1-not operational (Saburi) and 1-the gate of dam reservoir could not be closed to retain the water as the project affected persons were still residing in the submergence areas of the project for want of completion of rehabilitation and resettlement works (Aji 4).


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However, our audit observations on desilting of dam reservoirs at irregular intervals, non/ scattered carrying out of lining works and improper maintenance of canals and structures are discussed in the succeeding paragraphs.

2.9 Desilting

To avoid water losses, the Department was required to regularly carry out silt surveys, catchment area surveys and regular inspection of the dam structures/ canal networks as per procedures laid down in the Operation and Maintenance guidelines for Canals (2009), which will enable it to take corrective measures. Deciencies in the conduct of survey noticed by Audit during the scrutiny of records of the divisions have been discussed in the succeeding paragraphs.

2.9.1 Survey for desilting of Dam Reservoirs

Siltation reduces the storage capacity of the dam and increases overowing of water from the dam reservoir during monsoons leading to loss of water and consequent reduction in the availability of water in the reservoir. This also adversely affects irrigation and drinking water supply from the project. As per the recommendations (July 1980) of the Reservoir Sedimentation Committee6, capacity/ silt surveys at regular intervals of ve years should be carried out by the project authorities for all major reservoirs. The GoG issued (between February 2001 and February 2010) instructions/ guidelines for conducting of silt surveys, deepening of dam reservoirs where overowing of water occurred frequently, involving participation of people in desilting works and allowing farmers to take away silt from the dam reservoirs free of cost. However, no periodicity was prescribed by the Department.

2.9.1.1 Desilting dam reservoirs of Major and Medium Irrigation Projects

The silt surveys in six major irrigation projects were carried out by the Department between 1986 and 2010. Against the designed capacity of the dam reservoirs, there was reduction in storage capacity in all the six projects ranging from ve to 26 per cent. The project wise designed storage capacity and available storage capacity of water as of March 2016 is shown in Table 2 below:

Table 2: Details showing the reduction in storage capacity of dam reservoir

Name of project

Project completion

year

Designed capacity

(in Mcum)

Available capacity (in

Mcum)

Reduction in capacity (in percentage)

Year of silt survey

Brahmni 1953 73.48 58.33 21.00 1986 Machhu 1 1959 72.24 68.95 5.00 1986 Bhadar 1964 237.66 188.14 21.00 2000 Shetrunji 1965 415.69 308.68 25.74 1996 Machhu 2 1989 100.54 87.90 13.00 2004 Und 1 1999 72.50 69.05 5.00 2010 Total 972.11 781.05

(Source: Information furnished by the Department)

6 Ministry of Agriculture and Irrigation (Department of Irrigation), GoI had set up a Reservoir

Sedimentation Committee in February 1978 under the Chairmanship of Member (WR), CWC.


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Similarly, of the 56 Medium Irrigation Projects having total designed capacity of 1,369.38 Mcum, Department conducted silt surveys in 26 irrigation projects7 between the years 1986 and 2003 while surveys were not carried out in 30 projects. The project-wise data of designed/ available capacity and reduction in capacity related to 26 projects (as of March 2016) where silt surveys were conducted are given in Appendix III. Audit observed that a period ranging from 6 to 20 years had lapsed since conducting of the last silt survey in the dam reservoirs of all the major and medium irrigation projects. During this period the dams would have further lost their storage capacity.

The reduction in the capacity of 26 medium irrigation projects was 145.51 Mcum i.e., 22.07 per cent against designed capacity of 659.40 Mcum. The reduction in the storage capacity of 26 projects ranged between 0 per cent (Demi 2) and 44 per cent (Sani). The available capacity was based on the surveys conducted up to 2003 (Appendix III). It is pertinent to note that no silt survey had been carried out after 2010 in the case of major irrigation projects and after 2003 in the case of medium irrigation projects.

The Government stated (September 2016) that CWC guidelines were not mandatory for the State. It was further stated that silt survey was carried out by Gujarat Engineering Research Institute (GERI) as per availability of dam site when the site was dry. It was further stated that silt survey could be done even when the dam site is not dry by using sound wave technology.

The reply is not convincing as the Government should have prescribed periodicity for silt surveys, if they considered the CWC guidelines are not mandatory. Since regular silt surveys were not conducted, the Department did not have the data on the current capacity available for water storage.

It is recommended that Government may issue guidelines to conduct periodical silt surveys to assess the existing storage capacity of the dam reservoirs and to enable remedial action.

2.9.2 Status of desilting in dam reservoirs

During the years 2012-13 to 2015-16, the Department awarded desilting works of 36,59,627 cum and 1,65,42,664 cum in Major and Medium reservoirs respectively and removed silt of 32,59,741 cum (89 per cent) and 1,56,29,113 cum (92 per cent) in Major and Medium reservoirs respectively as shown in Table 3 and 4:

7 1986 (12 projects), 1987 (one project), 1988 (one project), 1989 (one project), 1990 (two projects),

1996 (one project), 2001 (ve projects), 2002 (one project) and 2003 (two projects).


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Table 3: Details showing desilting work done in the Major Irrigation Projects

Name of project

Desilting works done during Total 2012-13 2013-14 2014-15 2015-16

Quantity (in cum)

Amount (` in lakh)

Quantity (in cum)

Amount (` in lakh)

Quantity (in cum)

Amount (` in lakh)

Quantity (in cum)

Amount (` in lakh)

Quantity (in cum)

Amount (` in lakh)

Brahmni 8,17,200 57.39 0 0 35122 3.55 0 0 8,52,322 60.94 Machhu 1 23,000 6.23 1,13,000 39.56 0 0 0 0 1,36,000 45.79 Bhadar 0 0 8,30,000 22.61 0 0 0 0 8,30,000 22.61 Shetrunji 1,42,856 51.78 0 0 196800 36.20 1,96,800 35.00 5,36,456 183.92 Machhu 2 2,000 0.12 1,96,000 31.00 35000 0 25,803 4.34 2,58,803 35.46 Und 1 2,71,563 40.40 0 0 197314 27.03 1,77,283 27.03 6,46,160 94.46 Total 12,56,619 155.92 11,39,000 93.17 4,64,236 66.78 3,99,886 66.37 32,59,741 443.18


Table 4: Details showing the desilting work done in Medium Irrigation Projects

Year No. of Medium Irrigation

Project Dam

Estimated quantity of desilting

(in cum)

Quantity of desilting done

(in cum)

Amount paid for desilting

(` in lakh) 2012-13 31 45,64,932 44,87,197 827.95 2013-14 17 38,30,563 37,59,429 614.30 2014-15 30 52,36,385 43,09,207 377.56 2015-16 22 Not available 30,73,280 268.77 Total 1,56,29,113 2,088.58


The Department had incurred an expenditure of ₹ 25.32 crore on desilting works from the dam reservoirs during 2012-13 to 2015-16 as indicated in Table 3 and 4 above. The observations relating to desilting works are discussed below.

2.9.2.1 Prioritisation of desilting work

As per the guidelines for desilting works issued (August 2012) by the Department, only those projects should be taken up for desilting work in which ‘Full Reservoir Level’ was achieved at least in seven to eight years during the past 15 years. Out of 62 irrigation projects in Saurashtra region, 54 projects were having completed canal networks.

The desilting work was carried out in Goma, Bhimdad, Dhatarwadi 2, Saburi, Vadi and Hanol Projects at a cost of ₹ 3.33 crore during 2012-16 for removing 15,90,768 cum silt. Audit observed that in Goma, Hanol and Bhimdad water inow was up to 40 per cent of the designed capacity. While at Dhatarwadi 2, Saburi, Vadi and Hanol Projects, canal network were not ready due to land acquisition problems. Increasing storage capacity by desilting would have more benet only if there is a canal system ready. At the same time, there were number of projects like Aji 4, Bhadar 2, Demi 3, Hiran 1 and Ozat 2 where desilting work was not carried out since 2011-12 and they were frequently overowing. This indicated that prioritisation of desilting work was not well planned.

In reply, EE, Amreli Irrigation Division (AID), Amreli, stated (December 2015) that Vadi Irrigation Scheme was constructed in the year


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2000 and the dam overowed ve times during 2001 -15. Therefore, it was decided to carry out desilting work in the reservoir in the year 2012-13. EE, Bhavnagar Irrigation and Maintenance Division, Bhavnagar did not offer any remarks for Bhimdad, Goma and Dhatarwadi 2 projects. The Government stated (September 2016) that the desilting works were taken up on mass scale in almost all reservoirs which were empty during last four years.

The reply is not convincing as priority should have been given to desilting works as per the guidelines issued by the Department in August 2012.

2.9.2.2 Administrative and tender process of desilting works

As the monsoon season starts in June every year, uniform time limit of six months was allowed for desilting work at every project. The Government instructed (May 2012, 2013 and 2015) all the divisions that the desilting work at the projects be closed on 31 May of the respective year.

In 19 Irrigation Projects falling under seven divisions8, the Department could not complete administrative and tender process promptly during 2012-13 (11 projects9) and 2014-15 (9 projects10 including one project already taken during 2012-13). The administrative and tender processes were started in August 2012 and August 2014 and completed in February 2013 and February 2015 respectively. By this time, considerable portion of the working season was over and desilting work remained incomplete. Therefore, against 25,06,940 cum and 18,89,509 cum desilting quantities awarded during the year 2012-13 and 2014-15, quantities of 16,64,742 cum (66 per cent) and 7,29,593 cum (39 per cent) could only be completed by the contractors.

Thus, delay in nalisation of tenders and award of works led to shortfall in execution of quantities awarded for desilting.

The Government stated (September 2016) that streamlining of administrative procedures would be considered.

2.9.2.3 Completion of desilting works

Audit observed that in Rojki Medium Irrigation Project, desilting work was awarded (February 2013) for 1,31,260 cum with a stipulation to complete the work within six months. Though the contractor did not commence the work, the EE did not initiate action for terminating the contract and re-awarding the same to a new contractor after following due procedures in this regard. As a result, even in 2013-14, 31.42 Mcum water overowed.

Similarly, in Ghelo (S) Project, desilting work of 1,32,728 cum was awarded (April 2013) to a contractor. He did not mobilise adequate machinery and

8 (i) Amreli Irrigation Division, Amreli, (ii) Bhavnagar Irrigation Project Division, Bhavnagar,

(iii) Jamnagar Irrigation Division, Jamnagar, (iv) Und Irrigation Division, Jamnagar, (v) Rajkot Irrigation Division, Rajkot, (vi) Rajkot Irrigation & Maintenance Division, Rajkot, and (vii) Surendranagar Irrigation Division, Rajkot.

9 Aji-3, Bhadar-1, Demi-1, Khodiyar, Machhu-1, Machhu-2, Moj, Sasoi, Und-2, Und-1 and Venu-2. 10 Brahmani-1, Demi-2, Fulzar-1, Hanol, Limbadi Bhogavo-1, Saburi, Und-1, Vartu-1 and

Wadhawan Bhogavo-1.


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hence could execute only 68,427 cum (51 per cent) of desilting work awarded. In this case also, Department had neither taken effective steps to ensure the timely mobilisation of adequate machinery by the contractor nor had taken steps to get the work done through other contractors to complete the execution of the work before monsoon.

The Government stated (September 2016) that EEs were instructed to relieve the contractors who did not start the works within a given time frame and re-award the works to other contractors.

The fact remains that the storage capacity of the dam reservoir could not be restored to the extent of 2.64 lakh cum as targeted and water continued to overow.

2.10 Canal lining

2.10.1 Status of Canal lining

Canal lining is the process of reducing seepage loss of irrigation water by adding an impermeable layer to the bed and sides of the canals. The canal lining not only prevents weed growth but also being less permeable, increases the water velocity and reduces the amount of evaporation and silting that occurs, thereby making the canal more efcient.

Out of the six Major Projects, three irrigation projects (Bhadar, Machhu 2 and Und 1) had completely lined canal networks. One project (Shetrunji) had completely lined main canal but partially lined (20 per cent) branch canals and completely unlined distributaries and minors. Similarly, Machhu 1 irrigation project had partially lined main canals (26 per cent) and completely unlined distributory canals. The Brahmani irrigation project was constructed in the year 1953 and had completely unlined canal network. The status of lined and unlined canals in Major Irrigation Projects is shown in Table 5 below:

Table 5: Details showing lined and unlined canals position of Major Irrigation Projects

(Length of canal in Km)

Name of project

Year of construc-

tion

Details of lined canals Details of unlined canals Status as of March 2016

Main Canal

Branch Canal

Distributary

Minor Main Canal

Branch Canal

Distributary

Minor

Brahmani 1953 Nil Nil Nil Nil 33.00 Nil 73.59 Nil Not lined Machhu 1 1959 17.00 No Nil Nil 49.00 No 62.50 Nil Partial Bhadar 1964 76.60 Nil 37.12 186.18 Nil No Nil Nil Lined Shetrunji 1965 155.00 3.21 6.25 Nil Nil 12.83 17.29 233.72 Partial Machhu 2 1989 15.09 Nil 26.50 56.11 Nil Nil Nil Nil Lined Und 1 1999 29.01 Nil Nil 100.39 Nil Nil Nil Nil Lined Total 292.70 3.21 69.87 342.68 82.00 12.83 153.38 233.72


Similarly, 20 Medium Irrigation Projects had completely lined canal networks, 17 projects had partially lined canal networks and 11 projects had completely unlined canal networks (Appendix IV). Status of lined and unlined canals in the Medium Irrigation Projects is shown in Table 6:


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Table 6: Details showing lined and unlined canals position of Medium Irrigation Projects as of March 2016

(Length of canal in Km) Status of lining

No. of projects

Details of lined canals Details of unlined canals Main Canal

Branch Canal

Distributary

Minor Main Canal

Branch Canal

Distributary

Minor

Lined 20 302.98 29.49 320.26 513.02 Nil Nil Nil Nil Partially lined

17 164.02 12.09 79.71 78.36 26.52 2.77 178.55 238.16

Unlined 11 Nil Nil Nil Nil 175.83 Nil 194.80 7.80 Total 48 467.00 41.58 399.97 591.38 202.35 2.77 373.35 245.96


The Department had executed 510.56 km11 canal lining works at a cost of ₹ 103.87 crore during 2011-12 to 2015-16. The observations in execution of canal lining works in Major and Medium Irrigation projects are discussed in the succeeding paragraphs.

2.10.2 Execution of lining works on priority basis

For optimum water conservation and achieving the designed ow in the canal network of an Irrigation project, the lining of canals should be taken up on priority basis. Further, the proposals for the award of works should be initiated, processed and approved in time.

Shetrunji is the only major irrigation Project in Bhavnagar District. It has a CCA of 34,443 Hectares (ha). The irrigation project commenced from the year 1971-72. The total canal networks is of 428 km12 and includes Shetrunji Left Bank Main Canal (SLBMC), Shetrunji Right Bank Main Canal (SRBMC), Branch Canals, Distributaries and Minors. The canals of the project were provided (1978-79) with block and brick lining. Due to passage of time, most of the block/ brick lining has got worn out/ damaged as shown in Figure 1 below.

Figure 1: photograph showing damaged canal lining of RBMC of Shetrunji Major Project

11 Three Major Irrigation projects: 230.94 km (₹ 59.93 crore) and 19 Medium Irrigation projects:

279.62 km (₹ 43.94 crore). 12 Main canals: 155 km, Branches: 16 km, Distributaries: 24 km, Minors: 197 km and Sub Minors:

36 km.


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Audit scrutiny of records in EE, Bhavnagar Irrigation Division (BID), Bhavnagar revealed that the division had completed lining works in SLBMC and SRBMC from 2010-11 to 2014-15 in scattered lengths as shown in Table 7 below.

Table 7: Canal lining at broken length at Shetrunji Irrigation Project

Lining work in Mile No. Year Lining work in Mile No. Year SLBMC SRBMC 0 to 10 (Dam section) 2010-11 0 to 17 (Thadach section) 2010-11 20 to 50 (Sathra section) 2012-13 Minor 2 near Village Nani Rajshtali 2014-15 41 to 55 2012-13 Distributary D-1 of Thadach section 2014-15 Ch. 11840 m to 15200 m 2013-14


In addition, EE proposed (July 2013 and November 2013) nine lining works for SRBMC (36 km) and SLBMC (64.62 km) in the Project. The Department accorded (between January 2013 and February 2014) AA for seven works out of nine works proposed by the Division. For remaining two works, approval of the Department was awaited (March 2016). For seven works, the Division submitted (December 2013 and February 2014) proposals for obtaining the revised AA/ TS and Detailed Technical Sanction (DTS)/ Draft Tender Papers. However, approval was not received from the Government (March 2016). In effect, all the nine works are yet to be taken up (March 2016) though proposals were initiated three years back.

Further, as against the funds proposed by EE, BID, Bhavnagar for lining works amounting to ₹ 42.86 crore during the year 2011-12 to 2015-16, Government sanctioned only ₹ 26.35 crore (61 per cent) resulting in scattered execution of lining works.

Similarly, in seven works pertaining to ve Medium Irrigation Projects13 of EE, Bhavnagar Irrigation and Maintenance Division, Bhavnagar, though the AAs were accorded by the Government in ve works between December 2012 and February 2013, no further action was initiated by the EE. Further, proposals for AA for two works were submitted (October 2012 and September 2013) by the SE but approval was pending at Government level. The execution of lining works in patches had affected designed ow in the canal network.

In reply, the Department stated (January 2016) that due to less availability of funds, canal lining works were carried out in damaged patches on priority basis. It was further stated that at the time of inspection, damaged patches were identied and the same were considered in estimates and accordingly works were executed. It was also stated (January 2016) that estimates for lining works were prepared but it was instructed (April 2014) by the Secretary (WRD) to take up only structure renovation works. Hence, the proposals for lining works were not processed. However, it is planned to complete the lining work of canal of all schemes in next ve years as per availability of funds.

13 Ranghola (three works), Bagad, Dhatarwadi 1, Kalubhar and Rojki one work each.


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The fact remains that Department could not even execute the lining works in the identied damaged patches.

2.10.3 Water losses in unlined/ partially lined canals

As per Chapter 5 of the Operation and Maintenance guidelines for Canal (2009), operation of the canal during normal conditions would be the responsibility of the Section Ofcer (SO) in charge of the canal. He had to inspect the canal lining annually and repair and replace the same in decient areas.

In four test checked irrigation projects (one Major and three medium irrigation projects) with fully unlined and partially lined canals, the rate of water losses was high as shown in Table 8 below:

Table 8: Water losses due to unlined/ partially lined canals in Projects

Name of project

CCA (in ha.)

Details of lined canal in kms Details of unlined canal in kms Water loss rate (in

percentage) Main Canal

Distributary

Minors Main Canal

Distributary

Minors

Brahmani 12,935 0 0 0 33 73.59 0 25 Wadhwan Bhogavo 1

3,237 12 9.12 0 3.24 19.14 0 35

Limbadi Bhogavo 1

4,240 0 0 0 30 29.82 0 35

Kalindri 2,105 0 0 0 8.84 0 7.53 Stated as huge loss by the Division.


In the absence of maintenance of log book, audit could not verify whether annual inspection had been conducted by the SO. Though the seepage rate was high in these projects, priority to carry out lining work was not given by the Department. The proposal for execution of canal lining in Kalindri Medium Project was submitted (2011) to the GoG, but proposal remained under correspondence (March 2016). Further, proposals for canal lining were not prepared by the EEs for the remaining three projects. Since the canal lining work could not be taken up, water loss could not be controlled in these projects.

The Government stated (September 2016) that existing command area of Brahmani Irrigation Project and Limbadi Bhogavo irrigation project would be covered by the command area works of Sardar Sarovar Narmada Nigam Limited, hence, no ERM work was taken up. It was further stated that the ERM would be taken up wherever possible subject to availability of funds.

It is recommended that since the rate of water loss was very high in these projects and thus, warranting early actions.

2.11 Maintenance and repair of dam and canal structures

Maintaining the canals of water distribution network in good condition is necessary to avoid leakage of water. At all the points where a distributary or a Minor canal is taking off, Head Regulators are required to be provided to regulate and monitor the ow in a distributary or Minor through operation of


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gates. Deciency in maintenance and repair of dam and canal structures are discussed in succeeding paragraphs:

Inadequate maintenance of dam gate and canal structures

During the course of audit and site visit with the Departmental ofcials (between November 2015 and March 2016), Audit observed that:

· Amipur Irrigation Project is equipped with four automatic gates for regulating water ow but gates were not working properly. Hence, they were operated through a chain pulling system. The dam suffered structural damage due to earthquake in 2001.This caused water leakage. Although, the Government accorded AA (July 2014) for replacement of these gates with vertical lift gates, the process of testing soil conditions and bearing capacity was yet to be completed (October 2016).

The Government stated (September 2016) that the plans and estimates were already under approval and action would be taken immediately.

· In eight Irrigation Projects14, the canals were in broken condition, linings were damaged, surface of canal was uneven and the canals were not properly maintained. Seepage on both the sides of the main canal of Machhundri Irrigation Project was noticed.

· In a canal network, at all the points from where a branch canal, a distributary or a minor canal takes off, Head Regulators (HR) and Cross Regulators (CR) are required to be provided to regulate and monitor the water ow through these canals by the operation of gates. In 13 Irrigation Projects15 canal gates either not existed or were found damaged requiring replacement.

· In four Irrigation Projects16, aqueducts/ canal siphons were not maintained properly and were found damaged and water leakages were noticed.

The Government stated (September 2016) that action would be taken for maintenance and repair of dam and canal structures and the work had already been started in few projects.

· Out of 62 Irrigation Projects, in eight projects namely Bhadar Major Irrigation Project and seven medium irrigation projects viz., Chhaparwadi, Dhrafad, Gondli, Machhundri, Raval, Sasoi and Shorthi, locking systems were provided in the HR, CR and Direct Outlet gates in the entire canal network. Eight projects were under construction.

However, the Department stated that there was no locking system in rest of the 46 irrigation projects of Saurashtra region. Thus, these projects were susceptible to unauthorised operation and possible water loss.

14 Fulzar 1, Hiran 2, Machhundri, Sasoi, Singoda, Vartu 1, Vartu 2 and Und 1. 15 Amipura, Brahmani, Bhadar, Dhrafad, Fulzar-1, Hiran 2, Limbdi Bhogavo-1, Machhundri, Raval,

Sasoi, Und-2, Vartu-1 and Wadhawan Bhogavo-1. 16 Machhundri, Raval, Rojki and Vartu 1.


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The Government stated (September 2016) that action would be taken in this regard.

· In ten Medium Irrigation Projects17, extensive vegetation growth in canals was noticed. The Department did not pay attention to clearance of vegetation growth from the canals. Only in Und 2 and Uben irrigation projects, annual maintenance contracts were given by the EEs for removal of vegetation from the canals.

The Government stated (September 2016) that action would be taken in this regard.

2.12 Supervision and Monitoring

2.12.1 Water measuring devices and volumetric release of water

For increasing water use efciency and minimising wastages, theft and loss of water at various sections in a canal network, monitoring of water ow rate and water quantity at important points18 is essential. Installation of water measuring devices at such points helps a division to carry out correct canal gate operations and ensure proper release of water in the canal network.

GoG had established (February 2012) Gujarat Water Regulatory Authority (GWRA) to ensure equitable access to water by all and its fair pricing for drinking, rewarding conservation and other uses. However, the GWRA was not functioning as the members for GWRA were still not appointed by GoG (March 2016). Government had also framed Participatory Irrigation Management Act, 2007, with a view to provide a legal framework for the formation of Water Users Association (WUA) at various levels of irrigation system and to promote their involvement in the management of the irrigation system. The formation of WUAs was incomplete except in the Uben Irrigation Project.

Audit observed that out of 62 irrigation projects in 16 divisions in Saurashtra region, water measuring devices were installed only in 6 Irrigation projects (Aji-2, Aji-3, Bhadar, Moj, Phophal-I and Venu 2 projects ). Rule level marking for measuring ow and quantity of water was also not done in the various sections of the canal networks in any of the Irrigation projects except Uben Irrigation Project. This would have helped in controlling ow and optimal use of water.

During site visit (March 2016) by audit with the departmental ofcials of Shingoda Irrigation Project in Bhavnagar Division, Audit observed that the water was over owing in both banks of the canal in the 2.5 km length (Main canal to Minor 4) causing huge wastage of water.

EE, Bhavnagar Irrigation Division, Bhavnagar stated (July 2015) that process of installing of water measuring devices in Shetrunji project had been started.

17 Fulzar 1, Hiran1, Hiran 2, Jhanjeshri, Raval, Singhoda, Sorthi, Vartu 1,Vartu 2 and Uben. 18 HR opening, beginning and end point of each section of the canal, junction points from where

branch or distributaries starts etc.


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The EE, Amreli Irrigation Division while accepting the facts, stated (June 2015) that water measuring devices would be installed. The remaining 12 Divisions accepted that water measuring devices were not installed.

The Government stated (September 2016) that volumetric measurement system existed in all projects at HR level. The reply of the department is not convincing in view of the replies furnished by the EEs concerned and the site visits conducted by audit with the departmental ofcials.

2.12.2 Water Audit for irrigation projects

Water Audit gives a fair idea of total water drawn from the source, its actual use and the water loss in the system. Water audit includes scrutiny of records of the amount of water earmarked, water delivered, water loss and the measures to reduce water loss through leakages and other unaccounted water losses. The Department instructed (February 2010) all concerned ofcials to undertake Water Audit on canal network system. The National Water Policy of 2012 recommended Water Audit for promoting and incentivising efcient use of water.

Audit observed that Water Audit was conducted only in one project in Bhadar Irrigation Project out of 54 projects in the year 2011-12 and the report was submitted to Water and Land Management Institute, Anand for scrutiny. In absence of Water Audit, the Department could not properly assess the area of leakage/ wastage of water for taking measures to improve the efciency in storage and distribution network.

The Government stated (September 2016) that water audit was done every year at the divisional level and details of irrigation done during the year, water utilisation and revenue collection etc., were worked out on the basis of water audit only.

Reply of the Government is not convincing as none of the divisions had furnished the water audit report to audit though called for. On other hand, the EEs of the divisions concerned had stated that Water Audit had not been conducted as instructed by Government in February 2010.

2.13 Conclusion and recommendations

Gujarat State had to face frequent droughts due to scanty and erratic rainfalls since ground water resources were limited. The distribution of water resources within Gujarat is uneven with Central and South Gujarat regions accounting for 69 per cent, North Gujarat 11 per cent, Saurashtra 17 per cent and Kachchh three per cent of water resources. There were 19 major and 77 medium irrigation projects in the State as a whole. The Government has constructed six major and 56 medium Irrigation Projects in Saurashtra region to augment water resources with aggregate storage capacity of 972.11 Mcum and 1,361.60 Mcum respectively. Total irrigated area covered under these 62 projects was 2.86 lakh ha.


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There was no long term action plan for water conservation activities. Instead, the Department took up water conservation works, mainly, canal lining and desilting of dam reservoirs in a piecemeal manner. The average CCA achieved was only 24 per cent as against the CCA created for the irrigation under 53 Irrigation Projects during 2011-12 to 2015-16. This indicated sub-optimal performance in the water conservation activities.

Government neither prescribed the periodicity for silt surveys nor followed the CWC guidelines. Silt surveys had not been carried out since 2010 in the case of major irrigation projects and 2003 in the case of medium irrigation projects. Since regular silt surveys were not conducted, Department did not have a data on the current capacity available for water storage. Due to delay in nalisation of tenders and subsequent award of works considerable portion of the working season was over which led to shortfall in execution of quantities awarded for desilting. As against quantities awarded for desilting during the years 2012-13 and 2014-15, only (66 per cent) and (39 per cent) could be completed by the contractors.

Sixteen canal lining works in six irrigation projects could not be taken up due to pending administrative process. Priority was not accorded to four irrigation projects for canal lining resulting in water losses as high as 25 per cent to 35 per cent. The lining works taken up were executed in patches which could not achieve the designed ow of the canal networks.

Maintenance and repair of canals was inadequate in eight irrigation projects. In 17 irrigation projects, the canal gates/ aqueducts/ canal siphon either did not exist or were damaged, requiring replacement. GoG had established (February 2012) GWRA to ensure equitable access to water by all and its fair pricing for drinking, rewarding conservation and other uses. However, the GWRA was not functioning as the members for GWRA were still not appointed by GoG (March 2016).

Water measuring devices were not installed in 56 irrigation projects. As a result, release of water could not be controlled and monitored in those projects. Water audit was not conducted in any of the projects except in Bhadar Irrigation Project. Consequently, the Department failed to take remedial measures for improving the water storage efciency and its distribution networks in Saurashtra region.

The recommendations are as under:

Ø Government may prepare a long term plan for taking up works related to water conservation activities.

Ø Government may consider issuing guidelines prescribing periodicity for conducting silt survey and administrative delays may be streamlined for effective and timely execution of water conservation works.


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Ø Government may consider appointing members of GWRA and also promote the use of water measuring devices and adoption of modern technologies to minimise the water losses.

Ø Department may consider taking up the Water Audit in irrigation projects and also carrying out impact assessment of water conservation works executed for getting better outcome.


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CHAPTER-III

COMPLIANCE AUDIT

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CHAPTER III

COMPLIANCE AUDIT

Important audit ndings that emerged from the test check of transactions of the Departments of the Government of Gujarat are included in this Chapter.


3.1 Assistance under “Critical Infrastructure Project Scheme and Interest Subsidy under MSME Scheme”

3.1.1 Introduction

The Government of Gujarat (GoG) to facilitate investments in the State, enhance employment generation and employability and adhere to high quality standards for industries, introduced different schemes under its Industrial Policies1 announced from time to time. Sector specic assistance and various incentives were stipulated in these investment promotion schemes. These schemes under the Industrial Policies were implemented by the Industries Commissionerate (IC) through 26 District Industries Centres (DICs). The GoG incurred an expenditure of ₹ 2,908.39 crore from 2009-10 to 2014-15 for various kinds of assistance and incentives to industries under Industrial Policy 2009.

3.1.2 Scope and objectives of Audit

In this audit, we reviewed (i) Assistance given under the Scheme for Assistance to Critical Infrastructure Projects (CIP Scheme) and (ii) Interest Subsidy Incentive given under the Scheme for Assistance to Micro, Small and Medium Enterprise (MSME Scheme), under the Industrial Policy 2009 for the period from 2009-10 to 2014-15 by the IC. The assistance/ incentive given under the above two schemes covered ₹ 2,340.71 crore (80.48 per cent) of the total expenditure incurred by the GoG for assistance and incentives given to industries under the Industrial Policy 2009.

The main audit objectives were to assess whether the guidelines for giving assistance and incentives were strictly adhered to and assistance/ incentives were given only to eligible beneciaries; whether there were delays in the processing of applications and claims; and whether there was a proper monitoring mechanism in place at the IC ofce for these schemes.

Scheme wise audit ndings are discussed below:

1 Industrial policies were announced in the years 2003, 2006, 2009 and 2015.


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Audit Findings

3.1.3 Assistance under CIP Scheme

The CIP Scheme was promulgated in February 2009 by the GoG. Under the CIP scheme, assistance up to 60 per cent of the project cost for creation of infrastructure facilities2 in an industrial estate/ industry cluster/ industrial area would be provided by the GoG to the project implementing agencies (PIAs). Ceiling of assistance under the CIP scheme was ` 10 crore if area of the project was less than or equal to 100 hectares and ` 20 crore if area of the project was more than 100 hectares.

An Implementation Committee3 (Committee) was constituted under the CIP Scheme to prescribe the terms and conditions for implementation of the project. The proposal of the eligible PIA was received by the IC and put up to the Committee for approval. After approval of the proposal, disbursement of funds and monitoring of the progress were done by the IC. During 2009-10 to 2014-15 a total amount of ` 1,141.10 crore was disbursed to 58 PIAs, the details of which are given in Appendix V.

Of the 58 PIAs, we selected nine PIAs4 for detailed audit as the assistance given to these PIAs was 62.48 per cent of the total expenditure on the CIP Scheme. The following observations are made on the implementation of the CIP Scheme:

3.1.3.1 Implementation and monitoring of the projects

The CIP Scheme and the sanction letter issued by the IC stipulate various terms and conditions which were required to be complied by the PIA. Important terms and conditions are given below:

· PIA has to submit a detailed project report to the IC.

· Project has to be completed within a timeframe of two years.

· PIA has to appoint a Third Party Quality Assurance agency (TPQA).

· PIA has to submit quarterly progress report to the IC on a regular basis till the completion of the project.

· PIA has to make arrangements for operation and maintenance of the project.

· PIA has to provide project completion certicate and furnish grant utilisation certicate on completion of the project.

2 Approach road, by pass road, widening of existing road, water distribution centre, additional

infrastructure facilities like trauma centre, recreation centre, business support centre, resource centre or any other infrastructure facility required in the area specic to industry.

3 Headed by the Minister of State for Industry and Secretaries of various departments, Industries Commissioner and others.

4 Gujarat Industrial Development Corporation, Bharuch Udhyog Nagar Sahkari Sangh Limited, Gujarat Energy Transmission Corporation Limited, Uttar Gujarat Vij Company Limited, Surat Municipal Corporation, Bharuch Division of Roads and Buildings Department, Shapar-Veraval Industrial Association, Gujarat Power Corporation Limited and Gujarat Pipavav Ports Limited.

Chapter III – Compliance Audit

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· PIA has to submit undertaking that conditions of the sanction letter would be complied with.

Gujarat Industrial Development Corporation (GIDC) was the PIA which was given the maximum assistance of ₹ 440.25 crore for 68 projects out of a total assistance of ₹ 1,141.10 crore given under the CIP Scheme as listed in Appendix V. GIDC did not furnish details of the nalisation of tenders, progress reports of works undertaken, completion certicates or TPQA reports to the IC as required by the scheme guidelines. However, based on information obtained from GIDC, Audit observed that:

· Out of the 68 projects entrusted to GIDC, as on June 2016, in 25 projects the works were completed and the payments were also made. In 18 projects the works were completed but the payments for nal bill were pending whereas ve projects were under progress. The remaining 20 projects entrusted to GIDC were dropped.

· Out of the 43 projects completed by GIDC, only 12 projects were completed within the scheduled time limit. Out of the 31 delayed projects, in 25 projects the delays were above 100 days with maximum delay up to 697 days. In respect of the ve projects where work was in progress, in one project (Lodhika project for drainage works) the scheduled completion date had been exceeded by three years and in respect of one project (Chitra project for civil works) the tender had not been invited till date though the project had been sanctioned in November 2011.

· The CIP Scheme stipulated that the disbursement of the amount sanctioned will be proportionate to the expenditure incurred and only after 25 per cent contribution to the project cost or ₹ 50 lakh, whichever is less, is fully utilised by the PIA. In case of GIDC, GoG had disbursed ₹ 440.26 crore in advance upon approval of the projects based on the estimated cost. Hence, in respect of 20 projects dropped by GIDC an amount of ₹ 95.45 crore was lying with GIDC and was yet to be refunded to IC. Even in the 25 completed projects wherein nal payments had been made, as the disbursement had been made in advance based on the estimated costs, an amount of ₹ 138.26 crore had been disbursed against the required disbursement of ₹ 117.79 crore.

Considering the substantial amount of assistance being given to GIDC, a GoG undertaking, a mechanism should have been put in place in the IC to periodically review the utilisation of funds provided to GIDC for each project by insisting on the production of relevant documents as stipulated in the scheme/ sanction letters. The compliance to the requirements of the scheme guidelines should also be ensured by the IC. No reply has been received from the IC/ Government so far (October 2016).

Audit further reviewed 11 projects implemented by the remaining selected seven PIAs (i.e., other than GIDC). Audit observed that the PIAs did not comply with majority of the terms and conditions of the sanction letter as per the details given in Appendix VI. Further, IC was consistent in not monitoring


34

compliances with the terms and conditions by the PIAs. No reply has been received from the IC/ Government so far (October 2016).

3.1.3.2 Sanction of assistance in excess of the scheme guidelines

As per the CIP Scheme, a ceiling of ` 20 crore was laid down for assistance to a single project. Table 1 below shows the cases where assistance in excess of ` 20 crore was sanctioned for a single project:

Table 1: Excess sanction of subsidy (` in crore)

Sl. No.

Particulars Implementation Agency

Cost of the

project

Assistance sanctioned

Month and Year of sanction

Excess sanction

1 220 KV substation and transmission network at Abdasa taluka at Kachchh district

Gujarat Energy Transmission Corporation Limited (GETCO)

186.61 40.00 (March 2013)

20.00

2 Widening of road from Jamvada-Fangli to Charanaka 7 metre and from 7 to 10 meter

Gujarat Power Corporation Limited

60.65 36.39 (January 2011)

16.39

3 Widening of 8 roads of Vagra taluka of Bharuch district

Bharuch division of R&B Department

47.48 28.49 (December 2010)

8.49

Total 294.74 104.88 44.88

Project mentioned at Sl. No. 3 above was completed (June 2013) with a cost of ₹ 46.24 crore and funds of ₹ 27.86 crore was released to PIA for it. Thus, an extra assistance of ₹ 7.86 crore was paid to the PIA. In respect of remaining two projects where irregular assistance of ` 36.39 crore was sanctioned, details of status of project completion were not submitted by PIA (October 2016).

No reply has been received from the IC/ Government so far (October 2016).

3.1.3.3 Splitting up of the contract to avail extra assistance

Shapar Veraval Industrial Association (SVIA) applied (October 2011) for assistance for a project of upgradation of existing roads (46 Kilometres) originally estimated at ` 51.27 crore within its industrial estate. Subsequently, SVIA made (February 2012) two applications by dividing the project into two projects i.e., 27 kilometres road (` 30.97 crore) and 19 kilometres road (` 21.20 crore). However, SVIA invited (October 2013) tender for the above projects as a single project of 46 kilometres and accordingly issued the work order (24 February 2014). The Committee sanctioned (18 March 2015) both the projects separately and approved a total assistance of ` 32.35 crore being 60 per cent of the total revised project cost of ` 53.92 crore as both the projects individually were also above 100 hectares. Till August 2016, SVIA had incurred an expenditure of ` 39.95 crore against which grant of ` 23.97 crore was disbursed and the project was under progress.

Thus, against the maximum allowable assistance of ` 20 crore for a single project, the Committee sanctioned an assistance of ` 32.35 crore, considering

35

it as two separate projects, which resulted in sanction of extra assistance of ` 12.35 crore to the SVIA.


3.1.4 Interest Subsidy Incentive under MSME Scheme

A comprehensive scheme for assistance to MSMEs (MSME Scheme) was declared (February 2009) to make MSMEs of the state competitive. All existing and new industrial units, which satisfy the conditions of MSME as per the denition under the MSME Act, 2006 of the Government of India were eligible to get various incentives such as Interest Subsidy, Venture capital assistance, quality certication, Patent Assistance, Skill enhancement, Rehabilitation of sick units, etc. under this Scheme.

During 2009-15, an expenditure of ₹ 1,391.42 crore was incurred on this scheme on 15 different kinds of incentives. Audit reviewed the Interest Subsidy Incentive (IS Incentive) of the MSME Scheme as an expenditure of ` 1,199.61 crore (86.21 per cent) was incurred on this incentive during this period.

Interest Subsidy Incentive (IS Incentive) under MSME Scheme

The important features of the IS incentive as per the GoG resolution/ various guidelines issued in this regard are given below:

· All new MSME units and existing MSME units could avail interest subsidy for the term loan taken either for setting up new units or expansion or diversication or modernisation.

· Interest Subsidy was allowed at seven per cent to micro enterprises and ve per cent to small and medium enterprises subject to a ceiling of ` 25 lakh per annum. One per cent additional interest subsidy would be available to entrepreneurs less than 35 years of age in case of their rst project.

· Units applying within one year of loan disbursement would be eligible for subsidy for a period of ve years from the date of disbursement. Further, the unit would have to remain in production for a period of ve years from the date of commercial production.

· An existing unit would be eligible for expansion and diversication if incremental investment in xed capital was more than 50 per cent and for modernisation if incremental investment in plant and machinery was more than 25 per cent.

· Units would have to employ at least 85 per cent of the total employment and 60 per cent of supervisory and managerial employment from local persons.

· If the unit became defaulter in repayment of loans, such default period would be deducted from the period of ve years.



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The IS Incentive under the MSME scheme was sanctioned and disbursed by 26 DICs situated across the state. Till March 2013, the applications and claims were made by applicants (ofine applications) in hard copies and their approvals were given by the DIC manually during the IS Incentive eligibility period of ve years. DIC implemented (April 2013) an online system for the above processes, wherein the applicant had to get registered with the online module, ll up the application/ claim details online and then submit the relevant documents in hard copies to the respective DIC. The DIC would verify the online application/ claim with the physical documents received before registering the application and sanctioning of claims.

Three DICs viz., Ahmedabad, Surat and Rajkot (representing South, Central and Saurashtra regions of the state) wherein expenditure of ` 758.94 crore (63.27 per cent) was incurred during 2009-14 were selected for audit. Audit test checked les related to the ofine claims/ applications at the three selected DICs based on higher values of claims received. The online applications/ claims were test checked at DICs and database was analysed at Industries Commissionerate (IC). The following deciencies/ violation of scheme requirements were observed in the grant of IS Incentive:

3.1.4.1 Delay in approval of applications and subsidy claims

During the period 2009-10 to 2015-16, applications were approved for IS incentive under the MSME scheme both under the ofine and online system. Under the ofine system, no compiled data was available regarding the number of applications or the time taken for processing of applications, whereas in case of online system all such data was available.

Audit observed that a total of 9,056 applications were approved since the introduction of the online system in April 2013. In 116 cases, approval dates of application in the online data base were prior to document submission date. Thus, the system did not have data validation checks to restrict entry of document submission date prior to the application date and/ or the system date. Further, there was a signicant delay of more than three months in processing of 2,398 applications including 198 cases where processing took more than one year. No reply has been received from the IC/ Government so far (October 2016).

A total of 12,849 claims were submitted in respect of the 9,056 online applications during 2013-14 and 2014-15. Of these, 6,977 claims were sanctioned within three months from the receipt of claims and for the remaining 5,872 claims, a period of more than three months to more than a year was taken in sanctioning the claims (Three to six months-3,652 numbers, Six months to one year-1,888 numbers and more than a year-332 numbers).

An unduly long time of more than three months was taken in processing of 2,398 applications and sanctioning of 5,872 claims mainly due to non-xation of any time limit in this regard and also due to lack of monitoring by the IC.


37

It is recommended that a time limit be xed for processing of applications and claims to make the scheme more effective and attractive to the MSMEs.

3.1.4.2 Additional one per cent subsidy granted to ineligible entrepreneurs

The IS Incentive entitled one per cent additional subsidy to entrepreneurs below 35 years of age for the rst project. The same entrepreneur could avail subsidy for two different units but additional one per cent subsidy would be available only to the rst unit.

Audit observed that 42 online applications were received from 21 entrepreneurs. Each of the entrepreneurs had submitted two applications wherein all details regarding name, age and date of birth were the same but only the unit address was different. In addition to additional one per cent subsidy given for the rst project, additional one per cent subsidy was also given to all 21 entrepreneurs for their second project in violation of the provisions of the scheme which led to irregular grant of subsidy. Payment to nine out of the 21 beneciaries had been made till August 2016. Irregular subsidy to the extent of ` 1.63 lakh was extended to nine out of 21 beneciaries against 14 six monthly claims. Seventy six half yearly claims in respect of above nine beneciaries and all the 120 half yearly claims in respect of the remaining 12 beneciaries were not due/ presented till date.


3.1.4.3 Interest subsidy allowed in more than one category

(i) As per the IS Incentive guidelines/ clarications issued (July 2012) by the IC, an MSME unit could avail the benet of the scheme only under one category (new or modernisation or expansion or diversication) and only once during the scheme period. On analysis of 9,056 applications sanctioned through the online system, Audit observed that in 18 cases where the unit had availed the interest subsidy under one category, the unit had again availed the interest subsidy for the same or different category5. Irregular subsidy to the extent of ` 20.26 lakh against 30 six monthly claims was extended in these cases. Remaining 150 numbers of six monthly claims in respect of the above 18 beneciaries are not due/ presented till date.

(ii) In 53 cases, more than one application of the same unit was sanctioned for claiming interest subsidy. However, applicants had not made the claims in respect of the second unit so far (August 2016). This could result in fraud if the unit claimed subsidy against both the applications. Payments to 48 out of the 53 beneciaries had been made in case of the rst unit till August 2016. In case of the remaining ve beneciaries, claims had not been made for any of the units. Out of total 480 six monthly claims of above 48 beneciaries, subsidy to the extent of ` 2.12 crore was released against total 113 claims and remaining

5 (i) Both under new category – 5 cases (ii) Under new and expansion category – 8 cases (iii) Both

under expansion category – 5 cases.



38

367 claims were not due/ presented till date. All the 50 claims in respect of the remaining ve beneciaries are not due/ presented till date.

(iii) A comparison of ofine and online applications sanctioned under selected three DICs revealed that 113 units in Ahmedabad DIC, 50 units in Rajkot DIC and 75 units in Surat DIC availed interest subsidy from online as well as ofine system under the same category or different category. Details of irregular payment made to online applicants till August 2016 are shown in Table 2 below:

Table 2: Irregular payments to online applicants

Sl. No.

DIC Number of Beneciaries

Total Six Monthly Claims

Six Monthly Claims Made

Payment Made (₹ in crore)

Claims Not Due/ Presented

1 Ahmedabad 113 1,130 172 1.05 958 2 Rajkot 50 500 56 0.99 444 3 Surat 75 750 143 1.15 607 Total 238 2,380 371 3.19 2,009

It can be seen from the Table 2 that irregular payment of subsidy amounting to ₹ 3.19 crore was made to total 238 beneciaries against 371 six monthly claims. This amount of irregular payment may further escalate as payments of 2009 claims are yet not due/ paid.


It is recommended that all the DICs should scrutinise the ofine and online database and take corrective actions where beneciaries have taken the benet twice under the scheme.

3.1.4.4 Excess payments made for a single claim

In the online system, the beneciary submits claims for a period of six months. The system calculated6 interest subsidy based on the data regarding disbursement made by the bank and principal repayment made by the beneciary. Therefore, the number of days for which interest subsidy would be paid during any six monthly claim period would not exceed 184 days.

On an analysis of claims made by the beneciaries, audit noticed that in 47 cases, the system calculated payment for a period of more than 184 days for a given six months’ period. In these 47 cases details of the same claims had been repeated more than once in the claims sheet resulting in claims being paid for more than 184 days. For example, in Surat DIC, a unit viz., Krishna textiles, made a claim of ` 11.83 lakh for the six months period from 9 May to 8 September 2014 (184 days). However, either due to wrong entry of data twice or due to system error, the claim sheet showed the repeating of entry. As a result, the system calculated the claim for a period of 368 days (184 days+184 days) which worked out to ` 23.66 lakh (i.e., twice of ` 11.83 lakh). However, while approving the claim, DIC did not detect such

6 (Number of days x rate of interest subsidy x outstanding principal amount) divided by 365 days.

39

excess claims resulting in additional payment of ` 56.73 lakh in the above 47 cases. Had there been an effective monitoring system to disallow any claim for a period exceeding 184 days for a given six months’ period, the double claims as indicated above could have been avoided.


3.1.4.5 Interest subsidy approved on the basis of wrong certication

In case of modernisation and expansion of a unit, the DIC had to verify that incremental investment was more than 50 per cent of the xed capital in case of expansion and more than 25 per cent of the plant and machinery in case of modernisation. Further, actual investment after expansion and modernisation should not exceed the MSME threshold limit of ` 10 crore.

Audit noticed that in three cases interest subsidy had been sanctioned based on investment details of the unit as certied by a chartered accountant (CA). However, the investment gures certied by the CA did not match with audited nancial statements of all the three units as shown in Table 3 below:

Table 3: Sanction of subsidy to ineligible units

(` in crore)

Name of unit Opening Investment in xed capital/ Plant and machinery

Incremental investment

Total Percentage increase

Amount of subsidy

M/s. Precision Bearings Private Limited (Modernisation), Ahmedabad

As per certicate 6.64 1.80 8.44 27 0.47 (Oct. 2010 to March 2014)

Actual 7.82 1.80 9.62 23

M/s. Priya Dyeing & Printing Mills Private Limited (Expansion),Surat

As per certicate 4.90 4.24 9.14 86.53 0.67 (Jun 2011 to

Dec. 2015) Actual 7.02 4.24 11.26 60.40

M/s. Priyadarshini Fashions Private Limited (Expansion), Surat

As per certicate 2.11 7.60 9.71 360.19 0.86 (May 2012 to

Dec. 2015) Actual 3.81 7.60 11.41 199.48

Thus, in the above three cases as per the value of assets given in the certicate the units were eligible for payment of subsidy but as per audited nancial statements they were not eligible; as either the percentage increase was below norms or the threshold limit had been exceeded. However, DIC failed to verify the authenticity of the certicate issued by the CA with nancial statements available with the DICs concerned. This had resulted in irregular payment of ₹ two crore. A cross verication of certicate given by the CA with the audited nancial statements would have prevented payment of subsidy to ineligible beneciaries. No reply has been received from the IC/ Government so far (October 2016).

It is recommended that in case of expansion/ modernisation, the certicates given by the CA be invariably cross checked with the audited nancial statements of the unit to avoid payment of irregular subsidies.



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3.1.4.6 Application made after one year from the date of loan disbursement

Any textile sector unit, if qualied to be a MSME unit, could apply for assistance both under MSME Scheme or Scheme for Assistance to Textile and Apparel sector (Textile Scheme). Under IS Incentive, unit was entitled to get subsidy of interest on the loan taken for all the assets whereas, in case of the Textile Scheme, subsidy would be allowed for the interest paid on the loan taken for purchase of only plant and machinery. Further as per the IS Incentive, unit had to apply for availing interest subsidy scheme within one year from the date of rst disbursement of loans from banks/ RBI approved nancial institutions. Audit observed that in two cases as mentioned in Table 4 below, though the above norms were outed, the subsidy was sanctioned to the units.

Table 4: Subsidy paid to ineligible units

Name of beneciary Date of rst disbursement

Date of applying under Textile

Scheme

Date of applying under MSME

Scheme

Subsidy paid (` in

lakh) M/s. Giridhar Techfab Private Limited (GTL)

27 February 2012 03 January 2013 15 July 2013 77.86

M/s. Sanskar Industries Private Limited (SIL)

11 October 2011 21 May 2012 04 July 2013 46.57

Thus, under both the cases due to rst applying under the Textile Scheme and then applying afresh under the MSME Scheme, the submission of application was delayed beyond a year from disbursement date, yet the subsidy of ` 1.24 crore was sanctioned to the beneciaries.

Audit further noticed that while applying for interest subsidy under the Textile Scheme, GTL had declared that the list of plant and machinery purchased for the unit was ` 11 crore. However, when it applied for assistance under MSME Scheme declared that the list of plant and machinery purchased for the unit was only ` 9.67 crore, so that the unit would be eligible to avail the benet under MSME.


3.1.4.7 Payment of interest subsidy in excess of the annual limit

As per the IS Incentive guidelines, interest subsidy was payable at the rate of ve or seven per cent subject to a ceiling of ` 25 lakh per annum to the eligible MSMEs. In three ofine cases pertaining to Ahmedabad DIC, interest subsidy of more than ` 25 lakh was released in a year. This resulted in excess payment to the tune of ` 12.25 lakh7 in violation of the scheme guidelines.

7 (i) Classic Corrugations Private Limited- ` 4.31 lakh (August 2013 to July 2015) (ii) MBR

Flexible Limited- ` 5.26 lakh (October 2012 to October 2014) (iii) Mangal Cotton Mills Private Limited- ` 2.68 lakh (April 2012 to March 2013 and April 2014 to March 2015).

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3.1.4.8 Non-verication of employment created or years of production

The IS Incentive guidelines stipulated that the beneciary units would have to employ at least 85 per cent of the total employees and 60 per cent of supervisory and managerial employees from local population. It also stipulated that the unit had to remain in production up to ve years from the date of commencement of production. IC directed (June 2013) DICs to carry out inspection of the unit once in a year before approval of the subsidy claim to ensure compliance to the above conditions.

Audit observed that only an afdavit for compliance to the local employment condition by the units along with a list of employees was taken from the units at the time of approval of application/ claims. However, there was no mechanism in the DICs to verify the authenticity of the afdavit by calling the relevant documentary proofs such as, domicile certicate or any other Government issued documents/ Identity cards to establish that the persons employed by the units were locals during the inspection. Moreover, as per the directives of the IC, inspection of the units was done in the year the claim for interest subsidy was made. If the unit made the claim belatedly or stopped making further claims, there was no requirement of inspection being carried out to verify that the unit remained in production as directed.

Thus, non-stipulation of compulsory inspection once in a year irrespective of claims being made or not and non-collection of documentary proof at the time of inspection to establish the domicile of workers rendered the monitoring of these conditions of the scheme ineffective.

3.1.4.9 Irregular subsidy for investments in different units

The IS Incentive does not bar an applicant to claim incentives for more than one MSME unit. However, as per guidelines issued by IC Ofce, to decide the MSME status of the second unit of the same applicant, investment in plant and machinery of the two units should be clubbed.

On analysis of the online applications, 10 cases were noticed where the beneciary units had applied under the scheme for two different units. Had the investment been clubbed while processing the second application, the second unit would not be classied under micro but under small or medium entitling it to a lower rate of interest subsidy. Thus, due to non-clubbing of investment in these 10 cases, extra subsidy of two per cent was approved. Payment to seven out of the 10 beneciaries had been made till August 2016. Irregular subsidy of ` 3.21 lakh was extended to these seven beneciaries against total 15 six monthly claims. 15 six monthly claims in respect of the above seven beneciaries and all the 30 six-monthly claims in respect of the remaining three beneciaries were not due/ presented till date. No reply has been received from the IC/ Government so far (October 2016).

3.1.5 Conclusion and Recommendations

· A review of the assistance for Critical Infrastructure Projects revealed sanctioning of extra assistance of ` 12.35 crore due to



42

splitting up of contract and excess assistance of ` 44.88 crore given to three PIAs in violation of CIP Scheme guidelines. In absence of monitoring by IC resulted in release of excess grant of ` 115.92 crore to GIDC. Seven other PIAs test checked also did not comply with the majority of terms and conditions of the CIP Scheme which was also not monitored by the IC.

Ø It is recommended that there should be an effective monitoring system at the IC to ensure adherence of CIP scheme guidelines in order to prevent excess grant of assistance to beneciaries and sanctioning of assistance to ineligible beneciaries.

· Review of Interest Subsidy Incentive to MSME sector revealed decient monitoring by IC and DICs leading to violation of scheme guidelines, grant of assistance of ` 7.60 crore to ineligible beneciaries, delays in processing of applications/ claims and double payments.

Ø DIC should strengthen its application/ claim approval system for timely processing. It should also strengthen monitoring system to prevent sanction of excess subsidy to ineligible beneciaries.

Ø IC should strengthen its IT system to prevent irregular payment to beneciaries.

PORTS AND TRANSPORT DEPARTMENT g

3.2 Development of port sector in Gujarat through private participation (GMB)

3.2.1 Introduction

The Gujarat Maritime Board (GMB) was established (April 1982) by Government of Gujarat (GoG) for development of port related infrastructure in the State. As on 31 March 2016, GMB had under its control, 41 minor ports (16 engaged in cargo handling activities and 25 engaged in other activities like shing). Of the 41 ports, four8 were private ports and the rest were GMB ports. The liberalisation in the port sector of the state started in 1992 with the development of Pipavav port under the joint sector. Industries were encouraged to construct their own captive jetties by notifying (December 1993) rebate on wharfage9 rates and constructing private ports under the Port Policy of GoG (1995) using BOOT10 principles (July 1997). In all, GMB entered into 25 Captive Jetty Agreements (CJAs) during the period

8 Mundra (GAPL), Hazira, Pipavav and Dahej. 9 Wharfage is the amount that is recovered from captive, private and GMB jetty users by the GoG as

a charge for use of the water front which is a Government property. At regular intervals, GoG noties the wharfage rates applicable to all the three types of jetties through a Schedule of Port Charges (SoPC). The notication in December 1993 announced a rebate on the rate so prescribed for captive jetties.

10 BOOT – Build, own, operate and transfer.

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1999 to 2012 and initiated action for private participation in 10 ports11. The captive jetties and private ports together contributed substantially to the development of port related activities during 2010-15 and handled 52 per cent and 39 per cent respectively of the total cargo handled by all the minor ports of Gujarat during the above period.

3.2.2 Scope of Audit

As captive jetties and private ports were the major means through which private sector participation was sought from the private parties, Audit reviewed, 25 captive jetty agreements and privatisation of 10 ports to ascertain that the terms and conditions of private participation were not prejudicial to the interests of GoG/ GMB. A comprehensive review on the functioning of GMB was included in the C&AG’s Audit Report (AR) 2012-13 (Economic Sector), GoG which included operational performance of GMB ports, contract management and nancial management. It also covered privatisation through captive jetties and operational private ports up to March 2013. Observations seen for the period from April 2013 to March 2016 in the case of captive jetties, existing private ports and upcoming ports wherein commencement of cargo operation is still pending are discussed below:

3.2.3 Captive Jetty Agreements

The GoG notied (December 1993) that any industry which constructs its own captive jetty will have to pay to GoG only concessional wharfage rates (arrived at after setting off allowable rebates from the wharfage rates prescribed for captive jetties) till the time the capital cost incurred by the industry for the construction of the jetty was set-off or 25 years whichever was earlier. In continuation thereof, GoG prescribed (May 1999) the terms and conditions related to CJAs wherein the set-off of capital cost was available. These were adopted in 21 CJAs. The above terms and conditions were modied (January 2010) wherein the set off of capital cost was discontinued for the captive jetties commissioned after 31 March 2012. Four CJAs were entered into by GMB under the modied terms and conditions of CJA. Details of the 25 CJAs entered into are given in Appendix VII. The audit ndings related to the 25 CJAs reviewed in audit are enumerated below:

3.2.3.1 Delay in verication of capital cost of captive jetties

In respect of captive jetties commissioned before 31 March 2012 which were allowed to set-off their capital cost of construction (CCoC), the computation, verication and certication of the CCoC of each captive jetty was very important for determining the years up to which the rebate in wharfage rate would continue.

The delay in nalisation of CCoC of captive jetties was reported in Paragraph 2.11.1 of the C&AG’s AR 2012-13 (Economic Sector), GoG wherein CCoC in nine out of 21 CJAs had only been approved. The status of

11 Operational Ports –Pipavav, Mundra, Dahej, Hazira; Ports under progress –Chhara, Dahej (New),

Nargol, Jafrabad; Ports for which LoI is cancelled –Mahuva, Kacchigarh.



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CCoC nalisation/ verication of CJAs as on 31 March 2016 is given in Table 5 below:

Table 5: Cost verication status of Captive Jetties

No. of CJAs Status of cost verication work (as on 31 March 2016) 12 GMB had approved the capital cost of construction. 6 Technical verication was in progress. 3 Captive jetty owners had not furnished the required information.

(Source: Information received from GMB)

There was no time limit prescribed in the CJAs for furnishing the cost details by the Captive Jetty holders and completion of cost verication process by GMB. Audit observed that in three CJAs (Sl. No. 13, 14 and 18 of Appendix VII) even after periods ranging from 06 to 15 years from the Cargo Operations Date (COD), cost verication was still in progress (March 2016). In the three cases captive jetties (Sl. No. 15 to 17 of Appendix VII), which started cargo operation before entering into CJA with GMB, cost veri cation was not completed for more than 17 years from the CJA date (11 August 1999 to October 2016). In three cases captive jetties (Sl. No. 19 to 21 of Appendix VII) cost details had not been furnished even after a lapse of 5 to 7 years from the COD by the Captive Jetty holders.

Audit is of the view that delays in cost verication may lead to inadvertent grant of concession in wharfage charges to the licensee over and above the CCoC. In the case of Reliance Petroleum Limited (RPL) excess set-off was granted in the case of Single Buoy Mooring12 (SBM) 1 & 2 at Sikka due to delay in nalisation of the CCoC, which had to be subsequently recovered by GMB. Audit observations in this regard are mentioned in the succeeding paragraph.

Government/ GMB stated (August/ June 2016) that the verication process is time consuming in view of the intricate accounting, technical aspects and magnitude of amount in consideration. Further it was also stated that GMB had prepared an action plan to complete the cost verication work of remaining captive jetties in next three years.

The reply does not justify the excessive delay ranging from 5 to 17 years in the cost verication process of most of the jetties. Once the captive jetty is constructed, GMB issues completion certicate and recommends to Customs for declaration of the captive jetty as landing and shipping place. On such declaration by customs, captive jetties start their cargo operations and become eligible to avail set-off against the CCoC. When completion certicate has been issued and cargo operation has begun, GMB needs to lay down strict reasonable timelines for furnishing of cost details by the captive jetty holders. Audit had pointed out this in the C&AG’s AR 2012-13. Despite this, even after a lapse of four years, the position remains the same.

12 SBM is put in sea for handling the liquid/ gas cargo from large vessels that require more draft for

berthing.

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It is recommended that a time period for completion of cost verication process may be included in the CJA to make it binding on the Captive Jetty holders.

3.2.3.2 Failure to recover interest due to delay in nalisation of capital cost

GMB entered (28 July 1999) into a CJA with Reliance Petroleum Limited (RPL) for construction and use of two SBMs for its captive consumption at Sikka Port, which were completed and commissioned from 10 September 1999. The short recovery of wharfage charges for the two SBMs was mentioned in Paragraph 2.11.3 of the C&AG’s AR 2012-13 (Economic Sector), GoG. At the time of nalising the C&AG’s AR 2012-13, the CCoC of RPL had not been nalised.

Audit noticed that RPL claimed (July 2005/ June 2010) ` 452.51 crore as CCoC for the SBMs. As RPL had availed rebate of ` 436.37 crore until February 2012, and cost nalisation was still pending (19 March 2012), GMB commenced recovery of wharfage charges at the rate of ` 18 per MT from March 2012. GMB nalised the CCoC of RPL (March 2015) as ₹ 402.55. GMB decided (March 2015) to recover the excess concession of ₹ 33.82 crore (₹ 436.37 crore less ₹ 402.55 crore) granted to RPL with 12 per cent interest from the effective date i.e., the date on which set-off of CCoC was completed. However, RPL paid only principal amount of ` 33.82 crore in May 2015.

Audit further noticed that the veried CCoC of ₹ 402.55 crore had been set-off on the effective date of 8 July 2011 itself. Hence, from that date RPL should have been charged the full wharfage of ₹ 36 per MT. Audit calculated that RPL availed additional rebate of ` 96.90 crore from the effective date as mentioned above. Therefore, actual recovery should be ` 96.90 crore instead of ` 33.82 crore. On being pointed out in audit, GMB recovered the differential amount of ` 63.08 crore from RPL. However, interest as calculated by GMB amounting to ` 44.89 crore was not recovered from RPL till date (October 2016).

Government/ GMB stated (August/ June 2016) that recovery of ` 63.08 crore towards principal had been made and demand for recovery of interest had been raised. However, ` 44.89 crore remains outstanding from RPL (August 2016).

3.2.3.3 Undue Benet to Existing Captive Jetty Holders

The schedule of port charges (SoPC) is a core document describing different charges to be levied by GMB at all the ports under its jurisdiction. The current SoPC in force was issued in 2012. Before this, SoPCs were issued in 1989, 1994, 1998 and 2003. Out of the various charges levied at ports, wharfage charges levied in respect of captive/ private/ GMB jetties and water front royalty levied in respect of private ports are the major levies payable to GoG.

In the SoPC issued in 2003 and earlier, only one wharfage rate for captive jetties was notied on which a rebate of 80 per cent was allowed until the CCoC of the jetty was set-off; after which the full rate was applicable. GoG



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did away with the set-off option for new captive jetties commissioned after March 2012. Subsequently, the SoPC 2012 in July 2012 prescribed separate wharfage rates for (i) existing captive jetties where CCoC was not recovered and were availing set-off; and (ii) existing captive jetties where CCoC was already recovered through set-off or new captive jetties where no CCoC set-off was available. In the SoPC 2012, the existing rate for captive jetties as per SoPC 2003 was retained for the rst category and reduced rates were prescribed for the second category. Thus, the SoPC 2012 equated the captive jetties holders without set-off and those who had completed their set-off by availing the rebate. Table 6 shows wharfage rates of some key commodities in SoPC 2012.

Table 6: Rate of wharfage in SoPC 2012 for the captive jetties

Type of Cargo Rate of wharfage per MT in ₹ Captive jetties under Set-off Captive jetties after/ without set-off

Crude Oil 36 18 Cement 38 28 Liquid Chemical 77 64 Steel 68 56

(Source: SoPC Notication of 2012)

Audit observed that the SoPC 2012 gave a double benet to the existing captive jetty holders who had constructed their captive jetties before 2012 under the set-off regime as they paid lower wharfage rate during the set-off period and once their cost was recovered they would pay wharfage at reduced rates applicable for the second category. A lower rate was justiable for ne w captive jetty owners as they were not claiming set-off but not for existing captive jetty owners who had already recovered their CCoC from the GoG. A few instances are shown in Table 7 below:

Table 7 : Comparison of captive jetties under old and new conditions

Sl. No.

Jetty Name Cargo type

Set-off achieved

in the year

Set-off amount

(₹ in crore)

Rate of wharfage per MT

till set-off


from set-off date to July 2012


after July 2012

1 Digvijay Cement Company (DCC)

Cement 2007 3.79 ₹ 7.60 ₹ 38 ₹ 28

2 ABG Cement No set-off allowed under new conditions ₹ 28

It can be seen from the above table that DCC captive jetty which was commissioned prior to March 2012 paid wharfage at lower rate till set-off, full wharfage rate from set-off date to July 2012 and wharfage at reduced rate since July 2012. On the other hand, ABG Cement to whom set-off was not available also paid wharfage at the reduced rate.

Thus, prescribing a lower rate of wharfage for existing captive jetties holders under the set-off regime after completion of set-off period and equating them with the new captive jetty holders who were not entitled to set-off gave an

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undue favour to the existing captive jetty holders under the set-off regime. During the period August 2012 to March 2015, GoG extended an undue benet of approximately ₹ 182.39 crore (as detailed in Appendix VIII) to seven captive jetty holders by reducing the wharfage rates after completion of set-off (calculated based on the difference in the wharfage rate they were paying under SoPC 2003 after availing set-off and what they are paying under the new reduced rates prescribed by SoPC 2012).

The Government/ GMB stated (February 2016) that imposing a higher tariff as suggested by Audit to existing captive jetty holders as compared to the captive jetty holders without set-off option would not only be an injustice to the old players but also detrimental to their interest. It would not serve the purpose of the policy decision taken by the Government regarding not allowing set-off to captive jetties and private ports.

Reply of the Government is not tenable as audit is only questioning decision to equate the wharfage rates applicable to existing captive holders who had already received the set-off of CCoC with new captive jetty holders to whom set-off was not available. Moreover, audit had not questioned the policy of not allowing set-off to new captive jetties and private ports after April 2012.

3.2.4 Private Ports

The Port Policy of GoG declared in December 1995 gave a thrust to integrated port development strategy, privatising the incomplete works of wharf/ jetty/ quay of GMB, permitting to install modern mechanical handling equipment on the wharf/ jetty/ quay and privatisation of the construction of new wharves/ jetties in selected sites. To provide guidelines for investment analysis and capital recovery for the private port projects under the Port Policy, the BOOT principles were adopted (July 1997) with the following salient features:

· GMB would identify the port location and lease the backup land to the developer for a period of 30 years. At the end of the BOOT period, the assets would be transferred to the GoG at the fair value of the assets.

· The developer would have exibility in deciding and collecting all port related tariff except the GoG notied water front royalty (WFR)13 and would be allowed WFR payment at concessional rates until such time the total Approved Capital Cost (ACC) of the port was set-off.

During the period 1995 to 2015, ten ports were planned for development under the private sector, out of which three ports came under the private sector through Memoranda of Understanding (MoU) and the remaining seven were through a bidding process. The details of ports under private sector are indicated in Table 8:

13 WFR is paid by private ports to GoG for use of the water front, which is a Government property.

These rates are notied by GoG through SoPC at regular intervals under different options and have to be applied in accordance with the provisions in the MoU or applicability stated in the bidding documents.



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Table 8: Details of ports privatised

Sl. No.

Name of the port

Name of concessionaire Bidding/ MoU

Status WFR payment14

1 Pipavav Gujarat Pipavav Port Private Limited.

MoU Operational Set-off

2 Mundra Gujarat Adani Ports Private Limited.

MoU Operational Set-off

3 Dahej i) Gujarat Chemical and Port Terminal Limited. ii) Petronet LNG Limited

MoU Operational Straight line method

4 Hazira Hazira Port Private Limited. (HPPL)

Bidding 1999 Operational Straight line method

5 Chhara Shapoorji Paloonji Company Limited.

Bidding 2007 Under progress Premium over WFR

6 Dahej (New)

Sterling Port Limited. Bidding 2007 Under progress Four years and Five months concession period

7 Nargol Cargo Motors Private Limited.

Bidding 2007 Under progress Premium over WFR

8 Jafrabad Swan Energy Limited. Bidding 2007 Under progress As per HPPL terms 9 Mahuva Nirma Limited Bidding 2007 LoI cancelled Premium over WFR 10 Kacchigarh L&T Limited Bidding 2007 LoI cancelled 20 years concession period

(Source: Information compiled from with GMB)

Our major audit observations in relation to delay in cost verication of private ports, awarding of dual benet in developing the Mundra port and irregularities in development of Dahej port are mentioned in succeeding paragraphs.

3.2.4.1 Delay in cost verication

Timely completion of the process of cost verication and certication by GMB was very important for protection of interest of the Government in cases of private ports where the set-off option was adopted, as in these cases concessional WFR was applicable only till the time the approved capital cost was set-off. Audit observed (November 2015) that cost verication process was delayed and not yet completed in the two ports where set-off option was adopted viz., Pipavav and Mundra.

· Pipavav Port: The CA was entered into between Gujarat Pipavav Port Limited (GPPL), GMB and GoG in September 1998. The CA allowed cost of construction of Phase I and cost of two major expansions in the ACC for set-off. We observed that though the above works had been completed and commissioned in April 2008, the cost verication had not yet been completed (March 2016).

14 The SoPC 2003 gave two options to the private parties for payment of WFR viz., the set-off option

and the straight line option. In the set-off option, they could pay the concessional WFR rates till the time their capital cost was set-off through the concession received and then pay the full WFR rates. As per straight line method, they pay the prescribed WFR rates (which are double the concession rate and one third of full WFR) for the entire concession period. However, in the bidding documents of 2007, the set-off option was done away with. The bidders either quoted the minimum concession period or the maximum premium over full WFR for getting selected.

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· Mundra Port: The concession agreement (CA) between Gujarat Adani Ports Limited (GAPL-promoter of Mundra port), GoG and GMB was entered into in February 2001. The development of Mundra Port was planned in two phases15.

As per the CA of GAPL, approved capital cost (ACC) would be lower of the Detail Project Report (DPR) cost plus 20 per cent and actual cost of construction of Phase I and subsequent phases. ACC for different assets constructed from time to time had to be determined immediately after issuance of completion certicate by the GMB. We observed that though Phase I was commissioned in August 2007 and Phase II was partially commissioned in respect of Wandh West Port and one out of the three SBMs, the cost verication had not been completed in respect of Phase I and not even initiated in respect of Phase II to the extent commissioned.

The Government/ GMB stated (August/ June 2016) that in respect of GAPL the documents submitted by the Company in respect of Phase I were under scrutiny and in respect of Phase II, as extension had been granted up to March 2018, the required documents would be submitted only after that. In respect of GPPL all efforts were being made to nalise the cost vericat ion at the earliest.

GMB may x a time line and expedite cost verication process to avoid possibility of allowance of excess set-off to the port developers.

3.2.5 Mundra Port

Mundra port is the largest private port developed under the Port Policy. GAPL was allotted 3,404.37 acres of land by GoG through GMB on 15 April 2000 on lease basis for construction of port related infrastructure. GAPL had planned construction of port related infrastructure in two phases. The port was commissioned in October 1998.

Mention was made in Paragraph 2.13 of the C&AG’s AR 2012-13 regarding non-signing of supplementary agreement for port limit extension in respect of three SBMs and Wandh West Port of Phase II by GAPL and GMB and under recovery of full WFR at escalated rates. Audit observations in respect of this port for the period April 2013 to March 2016 are discussed below:

3.2.5.1 Awarding of dual benet

GoG extended port limit of Mundra Port (12 November 2008) to accommodate proposed Wandh Coal Terminal (WCT) under Phase II and also accepted to extend BOOT period up to 204016 for WCT with a condition of payment of full WFR as per SoPC 2003 on the cargo handled from WCT. GMB approved (December 2008) Detail Project Report (DPR) of WCT for ₹ 4,532 crore. Cargo handling at WCT was commenced from December 2010

15 Phase I: 815 metre quay wall, 1,100 metre quay wall, One SBM and Phase II: South Port, West

Port (Wandh), North Port, Three SBMs. 16 Concession period of Mundra port is up to 17 February 2031.



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and GMB started collecting full WFR at base rate of SoPC 2003 (₹ 30/ MT) from there on.

Subsequently, GoG notied SoPC 2012 which was applicable only to new ports where bidding process was not initiated till the date of Notication (20 July 2012) and set-off was not applicable. GAPL represented (June 2013) to GMB/ GoG that full WFR rates of SoPC 201217 (₹ 25/ MT) should be applied on WCT and also requested to consider the Capital Expenditure (CAPEX) of WCT as an addition in the ACC of the Mundra Port.

GMB recommended (October 2013) GoG to (i) apply SoPC 2012 for WCT and (ii) to include (January 2014) the CAPEX of WCT developed in extended port limit of Mundra Port in the ACC, subject to continuation of payment of full WFR by GAPL. GoG accorded (September 2015) its approval to include CAPEX of WCT in the ACC of Mundra Port and GoG also directed for collection of WFR at SoPC 2012 rate (₹ 25/ MT) instead SoPC 2003 base rate (₹ 30/ MT) for coal handled from WCT from September 2015.

Thus, GoG as against its original approval (November 2008) to levy full WFR on WCT as per SoPC 2003 without any set-off, granted (September 2015) the set-off for the capital cost of WCT of ₹ 4,532 crore and also approved levy of the lower WFR rates of SoPC 2012 of ₹ 25/ MT on cargo handled in WCT. This led to under recovery of ₹ 7.42 crore on the 14.84 MMT of cargo handled by WCT during September 2015 to February 2016.

The Government/ GMB stated (August/ June 2016) that the SoPC was last revised in 2012 and hence by decision dated 11 September 2015, the WFR at WCT had been put under the current SoPC. In future as and when the SoPC was revised, the revised rates would be applicable to WCT. It was also stated that though on the face of it there seemed to be some contradiction in allowing the SoPC 2012 rate and the set-off of capital cost in respect of WCT, the matter becomes crystal clear when one looks to the circumstances prevailing and the nature of decision taken to address a complex situation. Further the GoG had protected the interest of the public exchequer by not permitting GAPL the concession on royalty.

Reply of the Government is not tenable for the following reasons:

· The WFR rate of ₹ 25/ MT stipulated in 2012 SoPC was only for new bidders coming through open bidding and without any set-off option. Moreover, it is a base rate on which bidding would be done and is subject to change. To extend this as a xed rate without escalation to WCT was not correct and GMB failed to protect interest of exchequer as WFR rate of SoPC 2003 (₹ 30/ MT) was higher than the WFR rate of SoPC 2012.

· SoPC 2012 WFR rates were subject to 20 per cent escalation every three years. However, Government approved SoPC 2012 to APL without

17 These rates will be applicable to new and upcoming ports for which bidding procedure will be

carried out after July 2012. At present (March 2015) there was no new and upcoming port where developer was selected based on these rates.

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escalation and also stated that all the future revision in SoPC would be applicable to WCT which is contradictory.

· The exigencies and circumstances which warranted a change in policy compared to initial terms of extension in port limit neither have been specied nor brought out with clarity to justify extending both set-off as well as lower rate of SoPC 2012 rates to WCT.

3.2.6 Conclusion

GMB has made progress in developing port projects with private sector participation since 1993. The State encouraged private participation in the port sector due to which cargo handling of the state had also improved. Nevertheless, following deciencies were observed in the projects undertaken through private participation:

· In respect of captive jetties, cost verication had been delayed leading to excess grant of rebate amounting to ` 96.90 crore to RPL. Further an undue benet of ` 182.39 crore was extended to seven existing captive jetty holders in the tariff of SoPC 2012 as it equated captive jetty holders who had already availed set-off with new entrants without set-off option.

Ø GMB/ GoG should consider including detailed time lines for submission of cost details by the captive jetty owners after cargo operation date and completion of cost verication in the CJAs. It may also consider withholding of set-off till the process of cost verication is completed.

· In respect of private ports dual benet had been extended to GAPL by allowing both lower tariff rates and capital cost reimbursement in respect of Wandh Coal Terminal which resulted in revenue loss of ` 7.42 crore during 2015-16.

Ø GoG while approving special conditions for port developers should ensure that such approvals conform to the basic norms to promote port infrastructure development and trade in the State.


3.3 Development of State Highways and Rail Over Bridges by DBFOT on Annuity basis

3.3.1 Introduction

To create a legal framework for private participation in infrastructure projects, Government of Gujarat (GoG) promulgated the Gujarat Infrastructure Development (GID) Act, 1999 and GID (Amendment) Act, 2006. In pursuance of this Act, the Roads and Buildings Department (R&BD) decided (2009) to allow private participation in the widening and developing of 300 kilometres (km) of state highway, comprising of roads connecting ports,



52

industrial estates, special economic zones etc., and in the development of 38 Rail Over Bridges (ROBs). The private participation was envisaged through grant of concession by Design, Build, Finance, Operate and Transfer (DBFOT) method on Annuity basis.

Under the above method of private participation, the R&BD initiated (between July 2011 and September 2012) development of 11 stretches of state highways (collectively called the “State Highway Development Project” (SHDP)) and ve ROBs. Commercial operation in all the 11 stretches of state highways and ROBs commenced between April 2013 and October 2014.

3.3.2 Scope and Coverage of Audit

Audit of eight Concession Agreements (CA) for the development of 11 SHDP and one CA for the development of ve ROBs along with one agreement for appointment of Independent Engineer (IE) for ROBs was conducted in the ofce of the Superintending Engineer (SE), SHDP, Gandhinagar and Executive Engineer (EE), National Highway (NH) Division, Ahmedabad respectively during January 2016 to April 2016. The audit ndings relating to development of State Highways and ROBs are discussed in the succeeding paragraphs.

3.3.3 Development of State Highways

The R&BD engaged India Infrastructure Initiative (Triple-I)18 as the transaction advisor for providing services for the project report preparation and selection of private sector partners for the development of state highways in the State under the SHDP. Based on the Detailed Project Reports prepared (September 2010) by Triple-I, the R&BD invited (September 2010) proposals for selection of bidders for the construction, operation and maintenance of 11 stretches (339.22 km) of state highways in eight packages at total estimated project cost (TEPC) of ₹ 746.35 crore.

The R&BD approved (August 2011) bids for eight packages for a total semi-annual annuity of ₹ 55.36 crore and granted concessions by signing the CAs with the respective Concessionaires (January 2012). The concession period ranged from 12 years and nine months to 14 years including project construction period of nine months to two years. The details of road stretches, the annuity period and the amount of semi-annuity of each package are shown in Table 9 below:

18 The Infrastructure Development Finance Company Limited along with Feedback Venture Limited

had created a facility under the name of India Infrastructure Initiative (Triple I) to identify, create and catalyse bankable Infrastructure projects through public private partnership framework.

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Table 9: Details of road stretches included in the SHDP

Package Number

Name of the road stretches included in the package

Period of annuity Semi-annuity amount (` in

crore) From To

1 Dwarka-Mithapur- Okha Port and Sikka Patia-Sikka

October 2014 April 2026 10.42

2 Maliya-Pipalaiya Junction and Morbi bypass-Navalakhi

August 2014 February 2026 7.74

3 District Border of Rajkot -Jasdan and Lakhtar-Vadhwan

June 2014 December 2025 6.75

4 Savli- Halol August 2014 February 2026 4.14

5 Tarapur Chokadi- Khambhat Industrial area

June 2014 December 2025 4.16

6 RO-RO19 Point to NH 8E October 2013 April 2025 2.03

7 NH 8 to Maroli September 2014 March 2026 2.66

8 Nadiad-Mahudha-Kathlal-Kapadwanj-Bayad-Modasa

January 2015 July 2026 17.46

Total 55.36

The SE, SHDP, Gandhinagar was in overall charge of the SHDP. At the Department level, the Chief Engineer (Policy and Planning) was looking after the SHDP. The R&BD appointed (May 2012) M/s. SAI Consulting Engineers Private Limited as an IE for three years to provide engineering and supervision services during project construction and Operation and Maintenance (O&M) period. IE certies annuity payments and based on their certicate, the annuity is paid by the EE20 under whose jurisdiction the road stretch falls. The audit ndings relating to development of State Highways are discussed in succeeding paragraphs.

3.3.3.1 Damages not recovered for deciency in Avenue Plantation

As stipulated in the CA, the scope of the project included avenue plantation. Accordingly, the Concessionaire was required to plant required numbers of trees at the appropriate locations within the Right of Way (RoW) of the highways as specied by the IE on or before the project completion date. Further, it was the obligation of the Concessionaire to maintain the avenue plantations during the concession period.

Audit observed (April 2016) that the Concessionaires had either not carried out or partially carried out avenue plantations though all the eight packages were provisionally completed between April 2013 and October 2014. Audit also observed that the IE assessed damages to be recovered from annuity payments for decient plantation21 in Package 7 and 8 and accordingly the R&BD recovered damages from annuity payments made to the respective Concessionaire @ 0.1 per cent of cost of plantation not done by the Concessionaire22. However, no such action was taken in package 1 to 6 as detailed in Table 10 below:

19 Roll-on (loading point), Roll-off (unloading point). 20 (1) R&B Division, Jamnagar, (2) R&B (District) Division, Rajkot, (3) R&B (District) Division,

Vadodara, (4) R&B Division, Anand, (5) R&B Division, Bhavnagar, (6) R&B Division, Valsad and (7) R&B Division, Nadiad.

21 As per Section 12 of Schedule D of Volume-II B Part-I of the CA. 22 As per Article 17.8 read with Annexure-I of Schedule K of the CA.



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Table 10: Statement showing the details of decient plantation carried out

Package No.

Name of the road stretches included in the package

Minimum number of trees to be planted

No. of trees planted

Number of trees not planted due to non-availability of ROW or land suitability

Cost of trees not planted as per col. 4 (` in lakh)

Number of trees not planted due to Concessionaire’s failure

Damages to be recovered for the number of trees given in col. 6 (` in lakh)

1 2 3 4 5 6 7

1 Dwarka-Mithapur -Okha Port and Sikka Patia-Sikka

2,594 - - 2,594 19.95

2 Maliya-Pipalaiya Junction and Morbi bypass-Navlakhi

11,718

997

4,743 39.73 5,978 32.04

3 District Border of Rajkot -Jasdan and Lakhtar –Vadhwan

8,128

2,300

2,439 20.43 3,389 24.13

4 Savali- Halol Road 4,258

178

- - 4,080 8.89

5 Tarapur Chokadi- Khambhat Industrial area

Not furnished

- - 4,282 25.10

6 RO-RO point to NH 8E

Not furnished

- - 2,219 18.12

Total 7,182 60.16 22,542 128.22

As seen from the Table 10, Concessionaires of package 2 and 3 were unable to plant 7,182 trees for want of land due to non-availability of RoW and unsuitability of land due to salinity etc. R&BD should have withdrawn the work under Article 16.6 of CA as “negative change of scope of work” and recovered 80 per cent of the cost of plantation not carried out by adjusting the annuity. However, R&BD did not initiate any action for recovering cost of plantation of ` 60.16 lakh from the annuity payments made to respective Concessionaires. Further, in packages 1 to 6, due to the fault of Concessionaires, damages of ` 128.22 lakh were recoverable for non-planting of 22,542 trees (April 2016). However, recovery of ` 3.53 lakh was effected in package 6 and in the remaining packages no recovery was effected. Though these deciencies in the plantation were regularly brought to the notice of the R&BD by the IE, no reasons were found on records for not withdrawing the cost of plantation under Article 16.6 and for the short recovery of damages.

In reply, the SE, SHDP stated (May 2016) that as per the CA, avenue plantation was the responsibility of the respective Concessionaire. It was also stated that in each site visit, the issue was being taken up vigorously by the CE (P&P), his ofce and the IE and necessary recoveries on account of saving to the Concessionaires were proposed and recovered from the annuity payments.

The fact remains that the Concessionaires failed to comply with the provisions of the CA and the project highways remained without sufcient avenue plantations.

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3.3.3.2 Deciency in providing project facilities during concession period

The CA23 stipulates that the Concessionaire shall provide, operate and maintain project facilities such as inspection vehicles, an ambulance unit, highway patrol unit, a crane unit etc., during the concession period for each individual package.

Audit observed (March 2016) that during the project construction period, project facilities were not provided by the Concessionaires. Further, the Concessionaire of each project either provided the project facilities like vehicles during the O&M period for scattered periods or provided them in lesser number than what was envisaged in the CAs. The IE while certifying (October 2013 to March 2016) the rst annuity payments proposed to withhold from the annuity payments the cost of the project facilities not provided by the Concessionaires in all the eight packages aggregating to ` 2.25 crore24 though provision for withholding the cost did not exist in the CA. Accordingly, the R&BD withheld the amount from the rst annuity payment in each package.

The SE, SHDP stated (May 2016) that the required amount as worked out by the IE was withheld so there was no monetary benet to the respective Concessionaires. However, action would be taken for accounting adjustment i.e., the amount so withheld would be credited to work so that in future it was not refunded/ released back to the Concessionaires.

The reply of the SE, SHDP was not convincing as the purpose of involvement of private sector in the development of state highways was to provide project facilities to the users, therefore, withholding the cost of such facilities was in violation of the provisions of the CA.

3.3.3.3 Avoidable expenditure on construction of temporary toll plaza

As per article 16.7 of the CA of package 8 (Nadiad-Modasa road), the R&BD may, during concession period, require the Concessionaire to undertake construction of a toll plaza at a cost of ₹ 2.65 crore25. The construction cost of providing the toll plaza would be reimbursable to the Concessionaire as per the provisions of the CA and the payment of the O&M cost would be made in addition to the annuity payment. The Nadiad-Modasa road was opened to users in December 2013.

Based on trafc survey, the SE, SHDP submitted (September 2013) viability report to the R&BD for tolling of the above project highway. However, after a lapse of 15 months, R&BD instructed (November 2014) the SE, SHDP to x the location for construction of the toll plaza and to submit a proposal for toll

23 Schedule C of volume-III read with Annexure I. 24 Dwarka-Okha Port and Sikka Patia-Sikka Road (` 0.25 crore), (ii) Maliya-Pipalaiya Junction and

Morbi by pass-Navlakhi Road (` 0.48 crore), (iii) District Border of Rajkot- Jasdan and Lakhtar-Vadhwan Road (` 0.35 crore), (iv) Savli-Halol Road (` 0.24 crore), (v) Tarapur-Chowkdi- Khambhat Industrial Area Road (` 0.19 crore), (vi) Ro-Ro Point to NH 8E (` 0.10 crore), (vii) NH-8 to Maroli Road (` 0.23 crore) and (viii) Nadiad –Modasa Road (` 0.42 crore).

25 Plus adjustment for ination as per whole sale price index while issuing work order.



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notication. The SE, SHDP issued work order (March 2015) for the construction of toll plaza to the Concessionaire with stipulated period of completion of six months (i.e., September 2015). The R&BD issued toll fee notication (March 2015) for collection of toll with effect from 1 April 2015.

To facilitate toll collection, R&BD made temporary arrangement by constructing small rooms and other infrastructures at a cost of ₹ 51.86 lakh in March 2015. Audit observed (April 2016) that there was no justication on record for the delay of 15 months by the R&BD in taking appropriate decision on the feasibility report submitted (September 2013) by the SE, SHDP for levying the toll fee. Had the R&BD taken a decision on the feasibility report and adhered to other procedures including identication of location for the toll plaza and issue of work order to Concessionaire within a reasonable period of six months (i.e., by March 2014), the toll plaza would have been ready by September 2014. Thereby, R&BD could have avoided the expenditure of ₹ 51.86 lakh on the construction of the temporary toll plaza.

3.3.3.4 Non approval of Negative Change of Scope

As per the provisions of the CA, in case a Concessionaire fails to complete any construction work on account of force majeure, then the R&BD at its discretion may issue order for the negative change of scope (CoS) and withdraw the work. Accordingly, the Concessionaire was required to pay 80 per cent of the sum saved for the reduction in the scope of work and adjust the same from subsequent annuity payments by maintaining the Internal Rate of Return (IRR).

Audit observed (April 2016) that there was reduction in scope of work26 in Package No. 1, 2, 3, 5, 7 and 8 amounting to ` 7.39 crore due to non execution of items by the Concessionaires for the reasons solely attributable to the R&BD. The IE proposed (between October 2013 and March 2015) to withhold ₹ 5.91 crore from the rst annuity payment being 80 per cent of cost of sum saved. However, the R&BD did not approve the negative scope of work even after more than a year of commencement of commercial operation of packages. On the contrary, in packages 2 to 5, the R&BD approved (between March 2015 and March 2016) positive CoS for the works valuing ₹ 15.82 crore27 and accordingly made the payment to the Concessionaires without any delay. As the approval of negative CoS reduces the payment of annuity amount proportionate to 80 per cent of cost of works withdrawn, the R&BD should have given its approval within a reasonable time to safeguard the nancial interest of the Government.

3.3.3.5 Overpayment to the Concessionaires

Audit noticed instances of overpayments made by the divisions in annuity payments which are discussed below:

26 Reduction in bus shelters/ bay, box culverts, lined drains etc. 27 Construction of pipe culverts, providing irrigation pipes, raising of ducts and casing of critical

utilities etc.

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· In Savli-Halol Road (Package 4), the IE certied (October 2014) to deduct ₹ 89.52 lakh from the rst annuity payment, which included ₹ 71.42 lakh being Concessionaire’s share on account of IE’s remuneration besides other costs and expenses. However, the EE, R&BD, Vadodara deducted (October 2014) ₹ 75.02 lakh only. The EE did not consider the amount certied by the IE and without recording justication deducted less amount leading to overpayment to the Concessionaire of ₹ 14.50 lakh.

· As per Article 16.3.2 of the CA, the Concessionaire would bear costs of change of scope (CoS) approved during the project construction period limited to 0.25 per cent of the total estimated project cost (TEPC) and excess, if any would be reimbursed by the R&BD to the Concessionaire in the rst annuity payment. However, if the total cost of CoS approved prior to the project completion period was less than 0.25 per cent of the TEPC, the difference would be required to be adjusted from the rst annuity payment.

Audit observed (April 2016) that for all the eight packages, the IE proposed to withhold ₹ 1.67 crore being 0.25 per cent of the TEPC instead of adjusting the same from the rst annuity payment. The concerned EE also withheld the amount proposed by the IE. Since all the eight packages were under commercial operation, the R&BD instead of withholding the amount should have recovered it. This could lead to possible release of withheld amount. Audit noticed that the EE, R&B Division, Vadodara released ₹ 13.27 lakh in March 2015 from the amount withheld, which substantiates the audit nding.

3.3.4 Development of Rail over Bridges

The R&BD identied 38 level crossings (LCs) having Train Vehicle Unit more than one lakh for development under DBFOT- Annuity basis and signed (January 2009) a Memorandum of Understanding (MoU) with the Gujarat Road and Infrastructure Company Limited (GRICL) (The Proposer) for development of 15 ROBs in initial phase out of 38 of the identied ROBs. The construction of ROB’s was on cost sharing basis with the Railways. The Ministry of Railways accorded (September 2009) in-principle approval for development of ve ROBs only i.e., (1) Level crossing (LC) 1B on Ahmedabad-Mehsana-Palanpur road, (2) LC-2A on Ahmedabad-Palanpur road, (3) LC-6XA on Karamsad-Anand road, (4) LC-101 on Keshod-Ranikpura road and (5) LC-202X on Mehsana-Vijapur road.

The GRICL submitted (February 2010) a detailed proposal for development of the ve ROBs on Swiss Challenge Route under Section 10 of GID Act 1999. Based on the detailed proposal, the R&BD started (October 2010) bidding process under section 9 of the GID Act for selection of a developer and selected (July 2011) M/s. Patel Infrastructure Private Limited J/v Ajay Engineering Private Limited (the Concessionaire). The R&BD issued (July 2011) letter of acceptance (LOA) and signed (August 2011) the CA with the Concessionaire for the development of the ve ROBs.

The project cost of ve ROBs was ₹ 185.98 crore and the concession period was 17.5 years including project construction period of 912 days



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(i.e., 2.5 years). The semi annual annuity amount was ₹ 16.78 crore. The Concessionaire developed four ROBs and opened them to users (April 2014) whereas the one ROB on Keshod-Ranikpura Municipal Road was dropped (March 2013) by the R&BD due to public opposition.

The EE, National Highway (NH) Division, Ahmedabad was in-charge of the project. The R&BD appointed (November 2011) M/s. STUP Consultants Private Limited, Ahmedabad as the IE for three years for providing engineering services during the project construction and O&M period. The audit ndings relating to development ROBs are discussed in succeeding paragraphs.

3.3.4.1 Non appointment of Independent Engineer for O&M period

Article 19.2 of the CA stipulated that the IE would inspect the project at least once a month during the O&M period and submit inspection report (IR) to the R&BD/ the Concessionaire within seven days of the inspection for taking necessary action by them. IR contained overview of the status, quality and safety of the ROBs including its conformity with the maintenance and safety requirements, which included measures associated with trafc management and regulation such as road sign, pavement marking, trafc control, devices, road furniture; highway designs elements, enforcement and emergency repairs. Further, the IE in their IR would also describe in reasonable detail the lapses, defects or deciencies observed by them in the O&M of the project. Further, annuity payments were to be released based on the certication made by the IE regarding fullment of obligations in respect of required maintenance of the project by the Concessionaire.

The R&BD appointed (November 2011) M/s. STUP Consultants Private Limited as the IE for three years which expired in November 2014. The EE submitted (January 2015) a proposal for re-appointment of the IE for a further period of 36 months based on the willingness expressed (November 2014) by the existing IE. The IE was ready to continue his services for a further period of three years at a fee of ₹ 1.54 crore. However, the R&BD instructed (July 2015) the EE to invite fresh tenders for appointment of IE.

Audit observed (January 2016) that even after a lapse of 21 months after the expiry of the tenure of the then IE in November 2014, the new IE was not appointed. The EE also noticed (September 2015) deciencies in road worthiness. Meanwhile, the EE paid three annuities amounting to ₹ 50.34 crore up to April 2016 without the certication of the IE.

The EE stated (September 2016) that for the appointment of the IE, tenders were invited twice (February 2016 and April 2016) but no agency could qualify hence, tenders were invited for the third time which also could not be nalised (September 2016).

The facts remained that the R&BD should have initiated action for appointment of the IE well before the expiry of the initial contract period.

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3.3.4.2 Overpayment of consultancy charges to the IE

The R&BD appointed (November 2011) STUP Consultants Private Limited as IE for three years which expired in November 2014. As per clause 6.1.5 of the agreement, in case of reduction in scope of work for the Concessionaire, the reduced amount for the IE fees would be derived by multiplying derived percentage rate with the estimated amount of change of scope order given to the Concessionaire.

The IE quoted consultancy charge of ₹ 3.70 crore which was 1.989 per cent (derived percentage) of the project cost of ₹ 185.98 crore. However, due to dropping of one ROB, there was reduction in scope of work amounting to ` 40.16 crore and positive change in scope of work of ₹ 13.72 crore. Thus, nal project cost was revised to ₹ 159.54 crore. Therefore, consultancy charges payable to the IE worked out to ₹ 3.17 crore being 1.989 per cent of the nal project cost of ₹ 159.54 crore.

Audit observed (February 2016) that prior to the approval (November 2014) of the cost of dropped ROB by the R&BD, the EE issued (September 2014) completion certicate for consultancy services and paid (March 2015) consultancy charges of ₹ 3.40 crore based on nal project cost of ₹ 171.09 crore28. This was arrived at by considering the cost of dropped ROB as ₹ 28.61 crore (80 per cent of ₹ 35.77 crore instead of ₹ 40.16 crore) which led to overpayment of consultancy charges to the IE of ₹ 23 lakh.

The EE stated (September 2016) that the R&BD had reduced the amount of consultancy fees from ₹ 3.70 crore to ₹ 3.40 crore as per the tender cost of the IE. The consultancy fee worked out on the basis of the revised project cost and the revised consultancy fee was approved by the Government in October 2014.

The reply of EE was incorrect as the EE had considered 80 per cent of the proposed cost (₹ 35.77 crore) of the dropped ROB instead of 100 per cent of the nally approved cost (₹ 40.16 crore) of the dropped ROB for working out the nal amount of consultancy fee, which led to an overpayment to the consultant to the extent of ₹ 23 lakh.

3.3.4.3 Outstanding sharable cost of two ROBs from Railways

As construction of ROBs was to be undertaken on cost sharing basis with the Railways, the R&BD signed (September 2012) an agreement with the Railways. As per the agreement, Railways was to bear 50 per cent of the total cost of ROBs.

Audit observed (February 2016) that the R&BD demanded (March 2014) ` 9.47 crore as sharable cost only for two ROBs29. After deducting certain inadmissible expenditure like supervision charges/ contingency etc., the

28 ` 185.98 crore project cost less ` 28.61 (80 per cent of cost of ` 35.77 crore of dropped ROB)

crore plus positive CoS ` 13.72 core. 29 LC-6X Karamsad-Anand road: ` 4.12 crore and LC-1B Ahmedabad-Mehsana-Palanpur road:

` 5.36 crore.



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Railways paid (March 2014) ` 8.80 crore30 to the R&BD. In July 2014, R&BD furnished details regarding quantum of work done of remaining two ROBs31 but did not pursue with the Railways for getting the share of the Railways. The details of the cost of these two ROBs were also not furnished to Audit. After Audit pointed out the above under recovery, the R&BD initiated (April 2016) action for claiming the share of Railways for these two ROBs.

The EE stated (September 2016) that reminders were issued between May 2016 and September 2016 to Railway Authorities for payment of remaining outstanding amount.

3.3.5 Monitoring of the projects by R&BD

The CA agreement solely transferred the responsibility of monitoring of the project highways during the O&M period to the IE. Though IE submitted monitoring reports regularly but delay (ranging from eight days to 426 days) in rectifying or repairing the defect or deciency of the project highways, non providing project facilities and decient avenue plantation by the Concessionaire indicated absence of a robust multilevel system in the R&BD to monitor the privately funded project highways during O&M period.

Audit observed that though IE proposed recovery of damages for above deciencies, that was not the objective of private participation in creation of public infrastructure. Fact remained that the highways’ users were deprived of good quality roads and envisaged facilities in-time.

3.3.6 Conclusion and Recommendation

The R&BD initiative to allow private participation in the Road Sector by DBFOT on Annuity basis enabled it to open the services of the newly developed 350 kilometres of State Highways and RoBs to the public. However, Audit noticed certain deciencies relating to delay in appointment of IE for a long period and deciency in providing of project facilities and plantation along the project roads. Further, other deciencies such as excess payments to Concessionaires, non-recovery of sharable cost from Railways in case of ROBs and avoidable expenditure on structures having a total nancial implication of ` 3.82 crore were noticed.

Government may consider establishing a robust system of multi-level monitoring to oversee the O&M services of the concessionaires rather than leaving this responsibility solely to the IE. This would ensure delivery of desired level of services to ROB/ road users by the concessionaires. Government may also consider revamping its monitoring mechanism to take appropriate measures for safeguarding its nancial interests.

The matter was reported to Government in July 2016; their reply was awaited (October 2016).

30 ` 3.65 crore and ` 5.15 crore for LC-6X and LC-1B respectively. 31 LC-2A Mehsana-Palanpur road and LC-202X Mehsana- Vijapur road.

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3.4 Blocking of fund on incomplete approaches of Railway over bridge

Delay in construction of approach road to the railway over bridge due to belated action in acquisition of land led to non-use of constructed bridge resulting in blocking up of ₹ 20.42 crore.

As per paragraph 232 of Gujarat Public Works Department Manual (Manual), no work should be commenced on land which has not been duly made over by the responsible civil ofcer. Further as an exception to this provision, the work may be commenced for reaches of canal or road if two conditions are satised i.e., (i) that the possession of the land is obtained for more than 50 per cent of the length/ area and that the ofcers concerned are condent that the remaining 50 per cent of length/ area can also be acquired without much difculty or obstruction and that there is no possibility of any procedural delay which may cause delay in the completion of the work and (ii) that the contract stipulates the contract-period to be of a duration of not less than “12” (twelve) months.

The Roads and Buildings Department (R&BD) accorded (October 2010) revised administrative approval for the construction of six Railway Over Bridges (ROBs) with approaches in lieu of six level crossings (LC) with participation of Railway Authority on cost sharing basis. The railway would be responsible for construction of the ROB and the R&BD for the construction of the approaches. The Railway Authorities awarded (June 2012) work of ROB proper and completed the same (March 2014) at a cost of ₹ 4.65 crore

For the construction of approaches of ROB, the R&BD accorded (September 2012) technical sanction for ₹ 15.90 crore and awarded (February 2013) work at a cost of ₹ 11.74 crore. The Executive Engineer, R&B Division, Vadodara was in charge of the work. Details of the work of approaches is given in Table 11 below:

Table 11: Details showing works of approaches of ROB

Details of work Construction of approaches of ROB Date of work order February 2013 Stipulation completion of work August 2014 Present status of work Work in progress (October 2016) Up to date cost of work done ` 11.27 crore Work yet to be executed ₹ 3.73 crore (including extra and excess items) Land required for approaches West side: 7,544 square meter (Sq m)

East side: 9,028 sq m Land available at the time of issue of work order

West side: 7,544 sq m

The land on west side (46 per cent) was available with the Department at the time of invitation of tender on account of oral consent by land owners (November 2012). The contractor could complete the work of approach to west side but work remained incomplete on east side approach due to non-availability of 9,028 sq m land.



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Audit observed (November 2015) that the proposal to acquire the private land was submitted (July 2012) by the division to the Additional Collector, Vadodara. The joint measurement was carried out in February 2013 and notication under Section 4 and 6 were issued in April 2013 and October 2013. An amount of ₹ 4.50 crore was deposited with the Revenue Authority between July 2014 (₹ 2.25 crore) and August 2015 (₹ 2.25 crore). The payment of land award was made to the land owners and they allowed the Department to execute the work from August 2015 on east side approach.

The possession of land was received from the Revenue Department in February 2016. This shows that the Department took nearly three years in land acquisition. Delays at every stage of planning and acquisition of land and coordination between the Departments resulted in a cumulative delay in completion of approach work on east side after incurring an expenditure of ₹ 11.27 crore. Consequently, ROB completed at a cost of ₹ 4.65 crore in March 2014 could not be put to use for over two years as the approach from eastern side was still incomplete (August 2016).

Figure 2: Completed approach on West side Figure 3: Incomplete approach on East side

The Government stated (August 2016) that proposal to acquire the land on east side was submitted in July 2012. At the time of issue of work order it was assumed that the possession of land might be obtained within six months to one year. But due to change in law for land acquisition, the land was obtained after two years. It was further stated that Department had issued work orders to the agency in the interest of public.

The fact remains that due to delay in acquisition of private land, the bridge could not be put to use in absence of approach on east side and benet was not available to the people of surrounding areas even after incurring an expenditure of ₹ 20.42 crore (including cost of ROB of ₹ 4.65 crore, land acquisition cost of ₹ 4.50 crore and western side construction cost of ₹ 11.27 crore) and resulted in blocking up of fund.

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3.5 Extra expenditure

Due to non-adherence to codal provisions and lack of co-ordination in submission of structural designs by the R&BD and consultant, the works remained incomplete for more than ve years leading to extra expenditure of ₹ 26.44 crore and not achieving the intended benets.

According to Para 234 of the Gujarat Public Works Manual, works shall be commenced only after detailed design of the structures to be created is approved. Further, Government circular of June 1984 provided that Draft Tender Papers (DTP) prepared for works undertaken by Roads & Building Department (R&BD) should necessarily be accompanied by drawings of the proposed building duly endorsed by the Chief Architect and SE (Designs) of the respective circles. Audit scrutiny revealed the following:

(A) To provide education, lodging and boarding facilities to the girls students belonging to Schedule Tribe (ST), the Social Justice and Empowerment Department accorded (March 2007) administrative approval of ₹ three crore for construction of Adarsh Nivashi School (inclusive of three buildings namely school building, dining hall and hostel) for ST girls at Junagadh. The Government accepted (July 2008) the tender at a cost of ₹ 2.84 crore. The Executive Engineer (EE), Roads and Buildings (R&BD), Junagadh issued (June 2009) work order to the contractor with stipulated date of completion of eleven months from the date of receipt of structural designs of the building by the contractor. The structural design for only one building was received (June 2009) from Design Circle and contractor started the work. Since there was delay in furnishing the designs in respect of other buildings, after executing work valued at ₹ 0.42 crore, the contractor refused (March 2011) to execute the balance work on the plea that the rates of materials had escalated and also requested for either payment of price escalation for completion of residual works or relieve them from contractual obligation. The furnishing of remaining design by Design Circle was completed only by July 2011. The Government relieved (July 2013) the contractor.

The remaining work was awarded (July 2014) to another contractor at a cost of ₹ 3.85 crore with stipulated completion by April 2015. The contractor could complete the work at a cost of ₹ 4.51 crore and work was in nal stages (April 2016). The delay was on account of execution of excess/ extra items of work. Thus, even after incurring an expenditure of ₹ 4.93 crore on the work and lapse of seven years (June 2016), the intended benet could not be achieved. Consequently, this also led to extra expenditure of ₹ 1.44 crore32 in completion of the work.

The EE stated (August 2014) that structural design for this work could not be nalised by Design Circle. In absence of structural design for the work, contractor could not maintain the desired progress of work. Ultimately, the work had to be abandoned and the Government had relieved the contractor from the work.

32 Cost of work done by original contractor ₹ 0.42 crore plus tender cost of remaining work

₹ 3.86 crore less tender cost of original contractor ₹ 2.84 crore.



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Reply of the EE is not convincing as the tender was invited and work order was issued without the approved building designs in violation of codal provision and instructions of Government.

(B) The Education Department accorded (July 2008) administrative approval of ₹ 28.73 crore for the construction of new building of Dr. Babasaheb Ambedkar Open University (the University). The University had awarded (November 2007) consultancy work for construction of 10 non-residential institutional buildings and compound wall of the University at Charodi, Ahmedabad which included preparation of Architectural/ Engineering Design and project co-ordination services to M/s. SHILPAYAN. The EE, Roads and Buildings (Store) Division, Ahmedabad was in-charge of the work. The work was awarded (December 2009) at a cost of ₹ 23.26 crore with stipulated completion by August 2011.

At the time of issue of work order, University had possession of 28,800 square meter (Sq m) land and possession of remaining 11,000 sq m land was taken in July 2011. The EE found (December 2010) that the design submitted by consultant was not earthquake resistant as per National Building Code. Instructions were issued (July 2011) to consultant to get the designs veried by Design (R&B) Circle. The contractor could complete work valued at ₹ 1.75 crore during stipulated time limit. Considering reasons stated above and increase in cost of materials, the contractor requested (June 2011) to be relieved from the work of seven buildings and assured to complete work of three buildings. The High Level Committee33 accepted the request and relieved (August 2011) the contractor from the work of construction of seven buildings. The contractor completed (June 2014) work of three buildings at a cost of ₹ 7.12 crore.

The R&BD invited (September 2011) tenders for the remaining work for seven buildings at a cost of ₹ 37.68 crore and accepted (December 2011) tender of another contractor at tendered cost of ₹ 41.14 crore. The EE issued work order (December 2011) with stipulated completion by September 2012. However, due to delay in furnishing the designs, the contractor could complete the work valued at ₹ 2.71 crore (seven per cent) in stipulated time limit and ₹ 20.45 crore up to March 2016. The extension of time limit was under approval at Government level and work was in progress (March 2016).

Audit observed (November 2011) that the consultant had furnished (January 2010 to May 2011) structural designs to the contractor without considering the provision of earthquake resistant code. This came to the notice in December 2010 and High Level Committee decided (July 2011) to refer all structural designs to the Design (R&B) Circle. The consultant submitted (January 2012) revised structural drawings considering the provision of earthquake resistant code for three buildings. Hence, the original contractor was not able to complete the work. Further, out of the 271 designs for seven buildings, 186 designs were received by September 2012, 71 designs by December 2013 and 14 designs were yet to be furnished (June 2016). The new

33 Comprising of Principal Secretary, Education Department, Principal Secretary, R&B Department,

Vice Chancellor, the University and other members.

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contractor also could not complete the work due to delay in furnishing the designs by the consultant. As the consultant was appointed by the University, the R&BD should have co-ordinated with the Education Department and University to prevent delays on the part of the consultant as completion of work was getting effected due to delay in obtaining structural designs. Moreover, the University failed to invoke clause VII (b) of the agreement whereby SHILPAYAN’S fees shall be reviewed for the delayed time period as agreed upon mutually by the client (University) and SHILPAYAN. It also failed to terminate the contract as per clause XII (a) of the agreement.

Thus, the failure of the consultant in providing structural designs led to delay in completion of work by ve years. Further, work which was to be completed at a cost of ₹ 23.26 crore remained incomplete even after incurring an expenditure of ₹ 27.57 crore and also led to extra expenditure of ₹ 25 crore34 without achieving intended facilities. Thus, non-adherence to the codal provision and lack of co-ordination between University and R&BD led to delay in execution of works and extra expenditure of ₹ 25 crore.

The Government stated (October 2016) that the university had appointed the consultant to prepare the designs and drawings for the whole project. However, consultant had not provided all structural drawings approved by Design (R&B) Circle within the stipulated date decided by HLC. Hence, work was delayed. It was also stated that till today, the consultant had not submitted drawings for the auditorium. Further, the R&BD had frequently reminded between August 2011 and July 2014 the University authorities to provide the necessary pending drawings from consultant appointed by them. However, the University in its earlier reply of November 2013 had stated that there was no report of delay from the R&BD in issuing drawings by the consultant.

The reply shows lack of co-ordination between the Education Department, University, Consultant and the R&BD. Further, as per decision taken in HLC meeting (July 2011), it was the duty of the R&BD to give permission to all designs submitted by the consultant. The fact remains that the lack of co-ordination between Education Department and R&BD and the failure to ensure the necessary drawings are submitted in time had resulted in the work remaining incomplete and extra expenditure of ` 26.44 crore and not achieving the intended benet.

34 Cost of three building completed by original contractor ₹ 7.12 crore plus tender cost of remaining

seven building ₹ 41.14 crore less tender cost of 10 buildings in original tender ₹ 23.26 crore.



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NARMADA, WATER RESOURCES, WATER SUPPLY AND

KALPSAR DEPARTMENT

3.6 Planning and execution of works relating to utilisation of one Million Acre Feet surplus ood water of the Narmada River for the Saurashtra Region

3.6.1 Introduction

The Government of Gujarat (GoG) had allocated (June 2006) one Million Acre Feet (MAF) surplus ood water of the Narmada River for Saurashtra region in pursuance of Clause IV of the award (December 1979) of Narmada Water Dispute Tribunal35. The project to utilise one MAF surplus ood water for Saurashtra region from Saurashtra Branch Canal (SBC) of the Sardar Sarovar Project (SSP) was named (September 2012) as “Saurashtra Narmada Avtaran Irrigation (SAUNI) Yojana”. Under the SAUNI Yojana, one MAF surplus ood water of the Narmada River was to be transmitted in 100 days (July to October) to the Saurashtra region. The GoG accorded (February 2013) in-principle approval to the SAUNI Yojana at a cost of ₹ 10,000 crore. The SAUNI Yojana envisaged irrigation benet to 10,22,589 acres of land and also inter alia included increasing reliability of 115 reservoirs, improvement in ground water aquifers, improved accessibility to the domestic water, increase in agriculture output etc. The SAUNI Yojana was to be implemented by the Water Resource Department (WRD), GoG.

The SAUNI Yojana was planned to be completed in two phases viz., Phase I - laying of four main twin trunk pipelines and Phase II–laying of distribution pipelines connecting from trunk pipelines. The scope of work taken up under phase I included laying of 230 kilometers (Km) twin trunk lines of 3,000 mm internal dia Mild Steel (MS) pipes with inside and outside coating, construction of 10 pumping stations (PS) and Operation and Maintenance (O&M) of commissioned pipelines for 10 years.

The GoG accorded (April 2013) administrative approval (AA) to the four link pipelines (link 1 to 4) of the SAUNI Yojana for ₹ 10,861 crore36. Under the SAUNI Yojana, one MAF water was to be tapped from the Wadhvan Bhogavo 2 (WB 2) Water Resources Project (WRP)37 which gets water from the SBC of the SSP. The four link pipelines off takes ood water of Narmada from Machhu 2 WRP (Link 1), Limbadi Bhogavo 2 WRP (Link 2 and 4) and WB 2 WRP (Link-3) and these WRPs in turn are getting water of Narmada through Morbi Branch Canal (MBC), Botad Branch Canal (BBC) and SBC respectively as shown in Figure 4 below.

35 It was constituted for allocation of Narmada water and hydro power among Gujarat, Madhya

Pradesh, Maharashtra and Rajasthan. 36 Link-1 Macchu-2 WRP to Sani Irrigation Scheme (₹ 1,533 crore), Link-2 Limbadi Bhogavo-2

WRP to Rayadi Irrigation Scheme (₹ 3,229 crore), Link-3 Wadhvan Bhogavo-2 WRP to Venu–I Irrigation scheme (₹ 2,314 crore) and Link-4 Limbadi Bhigavo-2 WRP to Hiran-2 Irrigation Scheme (₹ 3,785 crore).

37 The SBC tail end was at WB 2 WRP.

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Figure 4: Four links connecting to SBC for lifting surplus water of the Narmada River

On completion of Phase I, 14 reservoirs were to be lled and 63,686 ha of land were to be covered under irrigation. The execution of Phase II was to be taken up after completion of Phase I. The WRD awarded (January 2015) the consultancy service to examine techno-economic feasibility for Phase II to consultant M/s. Multi Mentech International Private Limited, which was under progress (October 2016).

3.6.2 Scope of Audit

Audit was conducted (July-November 2015) at the ofce of the Chief Engineer (Saurashtra) and Additional Secretary, GoG in WRD. The implementing divisions located at Rajkot, Jamnagar and Bhavnagar was also covered to examine the records related to implementation of works taken up for utilisation of one MAF including utilisation of 0.03 MAF water for Goma Sukhbhadar Lift Pipeline Project (GSLPP). During audit, work of 12 packages of SAUNI Yojana, work of three packages of GSLPP and records relating to planning and consultancy services awarded were checked. The audit observations noticed relating to the SAUNI Yojana and GSLPP have been discussed in succeeding paragraphs.

3.6.3 Award of works under phase I

To examine techno economic feasibility and prepare detailed project report (DPR) for the SAUNI Yojana, the WRD awarded (February 2010) consultancy service for Phase I to M/s. Mott Macdonald Private Limited (the Consultant).

In Phase I, the WRD invited (December 2013) tenders for 12 packages on Engineering, Procurement and Constructions (EPC) basis and approved (between December 2013 and February 2014) tenders at a total cost of ₹ 6,761.08 crore. Work orders were issued in February 2014 to May 2014 with the stipulation for its completion in two years. The Link 1 of Phase I was



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completed physically in July 2016 and works of Link 2 to 4 were under progress (October 2016). The WRD has incurred an expenditure of ₹ 5,699.12 crore on SAUNI Yojana (October 2016).

3.6.4 Audit ndings

3.6.4.1 Commencement of works without ensuring adequate water

The original source of water for all the four links of the SAUNI Yojana and GSLPP is WB 2 WRP. The off take points, feeding canals and requirement of water for Link 1, 2 & 4 and 3 of SAUNI Yojana and GSLPP were as shown in Table 12.

Table-12: Off take points and requirement of water for SAUNI Yojana and GSLPP

Links Off take points Name of Feeding

canal

Water Required at off take points of each link for 100

days as per DPR

Water available

(in Cumecs) Cumecs MAF

Link 1 Macchu-2 WRP MBC 36.70 0.26 17 Link 2 Limbadi Bhogavo-2 WRP BBC 29.94 0.21 23 Link 4 36.05 0.25 GSLPP 8.33 0.03

Link 3 WB 2 WRP SBC 36.02 0.25 110

Total 147.04 1.00 (Source: Information furnished by WR Department)

Thus, against the requirement of one MAF (equivalent to 147.04 cumecs) water for Saurashtra Region; overall available quantity was only 110 cumecs (0.748 MAF). Further, as described in Table 12 above, water was available for Link 3 only and to meet the requirement of water for Link 1, 2 & 4 of the SAUNI Yojana, i t was necessary to increase the capacity of BBC and MBC or construct new canals parallel to BBC and MBC. Only then the water required at the off take points of link 1 and links 2 & 4 as per the Table 12 above would be available.

The SBC, BBC and MBC are under the control of the Sardar Sarovar Narmada Nigam Limited38 (SSNNL). Therefore, the WRD approached (November 2008) SSNNL to increase the capacity of BBC and MBC and to make available 0.97 MAF water for the SAUNI Yojana proportionately at the off take points. The SSNNL declined (November 2009) the demand on the plea that revised estimates of SSP were under advanced stage of approval by the Government of India (GoI) and hence any change in water use plan required re-visiting the entire SSP and this could also affect Accelerated Irrigation Benet Programme, a GoI scheme funding.

The WRD further approached (July 2013) for increasing capacity of BBC & MBC. The SSNNL informed (November 2013) that major construction works including structures and gate works of MBC and BBC were at completion stage and it was not possible to increase the capacity of MBC and BBC. In February 2014, the SSNNL informed that the overall water availability at WB 2 WRP would be only 110 cumecs and accordingly asked the WRD to

38 The Sardar Sarovar Narmada Nigam Limited is a GoG public sector undertaking, in charge of the

SSP and its canal system.

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factor in the same while planning for the SAUNI Yojana. Based on this, the Department revised (June 2014) their requirement to 110 cumecs, and intimated (September 2014) SSNNL of the requirement of water as 32.15 cumecs, 66.07 cumecs and 110 cumecs from July 2016, July 2017 and July 2018 receptively.

Meanwhile, despite a denial by SSNNL in November 2009 to enhance the capacity of BBC and MBC, the WRD awarded (February 2010) consultancy work to M/s. Mott MacDonald to examine Techno Economic Feasibility and prepare the Detail Project Report (DPR) for the SAUNI Yojana. The Consultants initially prepared (June 2013) DPR and cost estimates for Phase I of the SAUNI Yojana based on availability of 0.97 MAF water39 and WRD started (July 2013) tendering process for works of Phase I of the SAUNI Yojana.

Audit observed that though SSNNL declined the WRD’s requirement of 138.71 cumecs water in November 2008 itself, the WRD went ahead and awarded consultancy works for preparation of DPR and estimates for works for 138.71 cumecs water. Accordingly, the consultant M/s. Mott MacDonald prepared (March 2013) detailed design report of the SAUNI Yojana for ₹ 10,859 crore considering the likely availability of water of 138.71 cumecs. Further, the Department had prepared (December 2013) the detailed estimates for the works including pipelines and pumping system considering the higher requirement of water of 138.47 cumecs i.e., 26.57 per cent higher than the actual availability of 101.67 cumecs (excluding 8.33 cumecs for GSLPP) of water for the SAUNI Yojana.

Thus, failure of WRD to take cognizance of the actual availability of water as conrmed by SSNNL while awarding the consultancy work for preparing of DPR and estimates and consequently awarding contracts for the link pipelines led to avoidable increase in the project cost which could not be worked out by Audit. The increase in the project cost involved designing of higher capacity pumping station and related civil/ electrical works and using of larger dimension pipes than actually required.

The WRD stated (September 2016) that the Saurashtra region does not suffer shortage of water throughout the year and that the main links carrying water to the Saurashtra Region from WB 2 WRP would therefore not require full discharge at a time. Therefore, the water requirement at WB 2 WRP was agreed at 110 cumecs and the SSNNL had also started the enhancement of the pumping capacity of SBC. It was also stated that as suggested by the consultant, construction of a parallel pipeline of about 40 Kilometer (km) long for MBC from WB 2 to Machhu 2 WRP and 20 kms for BBC from WB 2 WRP to Limbadi-Bhogavo-2 WRP would be taken up in near future. Hence, non-availability of water at the off taking points on completion of the SAUNI Yojana would not arise.

Reply of the WRD is not convincing as the SSNNL had declined to enhance the capacity of the MBC and BBC in November 2009 itself. The WRD could

39 For 0.03 MAF water, works were already awarded by the WRD in April 2012.



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have factored this while planning the SAUNI Yojana and avoided creation of excess capacity at an additional cost. However, the WRD commenced works without taking cognizance of availability of water as conrmed by the SSNNL. It is also pertinent to note that even the overall availability of water of 110 cumecs would be deliverable to all the four links of the SAUNI Yojana only if new canals parallel to the MBC and BBC were constructed by the WRD for which no action was taken (October 2016).

Consequently, the SAUNI Yojana was not only exposed to the risk of cost overrun but could also lead to non-realisation of benets as envisaged in the Scheme. Further, the Department had to incur additional cost on account of construction of parallel canals and avoidable recurring expenditure on energy and O&M due to excess capacity created.

3.6.4.2 Imprudent investment in Goma Sukhbhadar Lift Pipeline Project

Prior to accord of Administrative Approval (AA) for SAUNI Yojana, the WRD had approved (October 2011) a project to utilise 0.03 MAF (8.33 cumecs) ood water out of one MAF surplus ood water of the Narmada River allotted to Saurashtra Region to ll Goma, Sukhbhadar and Kaniyad reservoirs40 and Krishnasagar Tank in Botad Town. The p roject called the Goma-Sukhbhadar lift pipeline project (GSLPP) was awarded in three packages and works commenced in April 2012. The works included in two packages were completed between May 2014 and December 2014, whereas work in the third package was in progress (September 2016).

The GSLPP envisaged lifting water (0.03 MAF i.e., 8.33 cumecs) from the BBC (at 47.350 km) and supplying it to ll the Goma, Kaniyad & Sukhbhadar WRP and Krishnasagar lake. The BBC gets surplus ood water of Narmada River from WB 2 WRP located at the tail end of SBC of Sardar Sarovar Project. The WRD accorded (October 2011) administrative approval for GSLPP at an estimated cost of ₹ 223.51 crore. For implementation of the GSLPP, the WRD awarded three EPC contracts as shown in Table 13 below:

Table 13: Details of awarded three EPC contracts for implementation of the GSLPP

Package No.

Brief description of work with purpose Date of award

Stipulated date of completion

Status of work

Tendered amount (₹ in crore)

1 Construction of PS at chainage 47,350 meter (m) of BBC for lifting water and supplying and laying of 2,350 mm dia (OD) MS pipeline for delivering the surplus water to Paliyad and 610 mm dia MS pipelines from Paliyad to Goma canal with allied works.

13/04/2012

12/04/2013

Completed in May 2014

139.50

2 Supplying and laying of 2,350 mm dia (OD) MS pipeline for delivering the surplus water from Paliyad to Goma dam. (From Goma dam water would be further delivered up to Goma bridge by gravity through natural drain).

07/06/2013

06/02/2014

Completed in December 2014

31.63

3 Supplying and laying of 1,974 mm dia (OD) MS pipeline from Goma bridge to Sukhbhadar WRP.

17/12/2014

16/08/2015

In progress

37.78

Total 208.91

40 These projects are also in Saurashtra Region.

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Audit observed (October 2015) that the trunk lines of Link 4 of the SAUNI Yojana which starts from Limbadi Bhogavo -2 WRP and ends at Hiran-2 WRP, passes within the distance of 100 meter near the earthen bund of the Goma WRP (at chainage 37.5 km of Link 4) as shown in Figure 5 given below. Scope of work of Link-4 included construction of a sump en-route near Goma WRP at Chainage 37.5 kilometer (km). The Full Supply Level (FSL) of the sump was 128.4 m while FSL of the Goma WRP is 126.50 m.

Figure 5: The diagram showing the linkage of GSLPP

(Source: Diagram prepared based on Index Map of Goma Sukhbhadar project and DPR of SAUNI Yojana provided by the WRD)

Thus, through the sump near Goma WRP of Link 4, water could be delivered to the Goma WRP reservoir without lift (FSL of the Goma Reservoir of 126.48 meter being lower than the FSL of the Sump near Goma Reservoir of 128.4 meter). Moreover, the designed capacity of trunk line of Link 4 would not be fully used to its designed capacity of 36.05 cumecs as the actual overall water availability for SAUNI Yojana was reduced by 36.19 per cent. Hence, the WRD could have prudently planned to use trunk line of Link 4 for delivering water in Goma dam for its onward supply to the WRPs viz., Kaniyad, Sukhbhadar and Krishnasagar lake by gravity instead of being lifted from the BBC.

The SAUNI Yojana was planned as far back as 2008. The GSLPP project was approved in October 2011 and work commenced in April 2012. Thus, with comprehensive planning the GSLPP could have been limited to the off take from Link 4 and there could have been a savings of ₹ 74.62 crore41. In addition, an estimated amount of ₹ 4.54 crore per annum required for electricity could have also been avoided.

41 Work not to be executed ₹ 32.25 crore of Package 1 (tendered cost - ₹ 139.50 crore – work

executed - ₹ 107.25 crore) + tender cost of Package 2 - ₹ 31.63 crore + Electricity connection for pumping station - ₹ 10.74 crore).


GSLPP Pipeline which was meant to supply water in Goma canal and Goma Dam. This could havebeen avoided and water to Goma Dam could have been drawn from Link 4 just 100 mtrs away.


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The WRD stated (September 2016) that the distance between source of water for link 4 and that of Goma dam was about 37.50 km where as the distance between source of water from BBC-Paliyad-Goma pipeline and Goma dam was about 23 kms. Thus, the delivery of water to Goma Dam from BBC was more economical. Further, FSL of Sukhbhadar reservoir is 109.20 m while FSL of Goma reservoir was 126.50 m and there was a ridge separating these two reservoirs. Due to this ridge water could not be provided in Sukhbhadar reservoir by gravity from Goma Reservoir.

Audit has not commented on the work undertaken by the WRD to link Sukhbhadar to Goma Reservoir and ridge referred to in the reply. Further, WRD has not offered any comment as to why the water from sump of Link 4 pipeline of SAUNI Yojana, being at a higher elevation and at a distance of 100 meter from Goma Reservoir could not drawn through gravity. The fact remains that WRD commenced the work to ll the Goma Reservoir without planning appropriate links thereby increasing the cost of the GSLPP by ` 74.62 crore and resulting in avoidable recurring energy charges of ` 4.54 crore per annum for lifting water.

3.6.5 Conclusion

The works of Phase I was taken up without ensuring actual water availability of 147.04 cumecs (including 8.33 cumecs for GSLPP). Though the SSNNL declined to enhance the capacity of MBC and BBC and agreed to provide only 110 cumecs water, the WRD awarded the consultancy services for preparation of DPR on the presumption that 138.71 cumecs water would be available. This led to increase in the project cost of works of Phase I due to excess capacity created.

The SAUNI Yojana was planned as far back as 2008. The GSLPP project was approved in October 2011 and work commenced in April 2012. Thus, with a comprehensive planning, the GSLPP could have been limited to the off take from Link 4 and more than ₹ 74.62 crore could have been saved. In addition, estimated amount of ₹ 4.54 crore per annum required for electricity could have also been avoided.

3.7 Poor planning and execution of Karjan Right Bank High Level Recharge Canal

The Executive Engineer (EE), Irrigation Project Division (IPD) No. 4, Rajpipla proposed (September 2005) to construct Karjan Right Bank High Level Recharge Canal (KRBHLRC) for supply of water at the higher altitudes where water could not be delivered through ow irrigation. The KRBHLRC was to off take from Karjan reservoir and intended to provide irrigation to 1,200 hectare land of 12 villages of two talukas viz., Nandod and Garudeshwar of Narmada District. The WRD accorded (April 2008) administrative approval (AA) for the construction of KRBHLRC for ` 4.49 crore.

The scope of the KRBHLRC was (i) construction of the Head Regulator (HR), (ii) construction of KRBHLRC from chainage 0 to 8,490 meter (m) (except chainage 1,350 to 4,460 m) and chainage from 8,490 to 16,230 m, and

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(iii) construction of 33 structures. Audit observations in respect of works of HR and KRBHLRC are discussed in succeeding paragraphs.

· Non construction of Head Regulator

The WRD awarded (September 2012) construction of HR with approach channel to a contractor at a cost of ` 5.59 crore with stipulated completion by March 2014. The site of work included 3.25 ha forest land which was part of the 110.54 ha forest land permitted (May 1980) by the erstwhile Agriculture, Forests and Co-operation Department for auxiliary works for the construction of Karjan Dam, subject to the condition of keeping the forest intact. The forest land falls under the Shoolpaneshwar Sanctuary which required prior permission from the National Board for Wildlife (NBWL). The EE initiated the procedure for permission in January 2012 which was not received up to April 2016. As a result, the work was not started by the contractor (April 2016).

The WRD was aware that the sites of HR, approach channel and the initial reach of the KRBHLRC (0 to 450 m) were in the forests area. However, the EE submitted (January 2012) permission for diversion of forest land only after four years of approval (April 2008) of AA which remained under correspondence between the EE, Gujarat Forests Department (GFD) and State Board for Wild Life (SBWL) for submission to NBWL, New Delhi till April 2016.

The EE stated (April 2016) that they were of the view that the permission for use of forest land was not required from the GFD as there was already an order (of May 1980) for use of forest land for the Karjan Project. However, when the GFD verbally informed that the area was declared (1989) as a Sanctuary and required prior permission of SWBL and NBWL, necessary proposal for diversion of forest land was submitted in January 2012.

Reply of the EE is not tenable as the Forests Department informed the Division that the area was declared (1989) as a sanctuary area and required prior permission of SBWL and NBWL. Thus, delay on the part of the WRD for obtaining diversion of forest land led to non-completion of HR and initial reach of canal construction.

· Construction of KRBHLRC

The WRD awarded (February 2013 and March 2014) two works for the construction of KRBHLRC (from chainage 0 to 16,230 meter except from chainage 1,350 to 4,460 meter) for a total tendered cost of ` 9.63 crore with stipulated completion by February 2015 and March 2016 respectively. The site of work required 2.85 ha forest land, 21.55 ha Government land and 60.05 ha private land. Both the works remained incomplete (April 2016) due to non-acquisition of private and forest land. Consequently, the KRBHLRC was constructed in scattered lengths and an expenditure of ` 3.44 crore (April 2016) was incurred. The EE stated (April 2016) that the land owners were not ready to give their land for KRBHLRC, hence 10.48 ha land remained to be acquired.



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· Non- approval of design of structures

The scope of work included construction of 33 structures which included two major structures. Audit observed that against approval required for designs of 33 structures, nal design of only 10 structures were approved by the Central Design Organisation (CDO), WRD and work of these structures completed; while design for remaining 23 structures were yet to be approved (April 2016). CDO suggested (January 2012) that they would provide design for large and critical structures only and designs for small structures had to be prepared based on typical design at EE level and was to be approved at the Department level. The CDO approved typical design (January 2015) for pipe drain, siphon, Village Road Bridge (VRB) and fall. Based on typical design, the SE approved (June 2015) three designs for other structures of pipe drain/ fall. However, the Division did not prepare and obtain SE’s approval for remaining structures and waited for the approval of the CDO (September 2016). In spite of the instructions from the CDO in January 2012, the Division did not initiate action to complete the designs of 23 structures which consequently delayed the construction of structures.

· Improper planning

Since construction of KRBHLRC was held up due to problem in obtaining clearance of forest land and non-acquisition of private land, the WRD instructed (July 2014) the EE not to create any further nancial liability until further orders. The EE instructed to stop construction of canals. However, the Chief Engineer and Additional Secretary (Central Gujarat) (CE&AS) directed the EE to suggest alternate proposal for lifting of water from Gora distributory (A distributory of the Karjan Project). The EE suggested (August 2015) that the Gora Distributory canal was 16,445 meter long and water could be own to KRBHLRC through lift irrigation after carrying out modernisation works in remaining chainage from 8,420 m onwards. Therefore, it was proposed to lift water from the Gora Distributory and connect the KRBHLRC at chainage 4,490 m. The Department constituted a committee (November 2015) to look into the issues42 relating to KRBHLRC. Based on the decision of the committee, the WRD instructed (January 2016) the EE to take steps to complete the remaining works. However, no progress was made (October 2016).

It is pertinent to mention that CDO had advised the EE, IP Division No.4 (October 2008) i.e., prior to commencement of works of HR and KRBHLRC to study the feasibilities of lifting the water from the Gora distributary through lift irrigation scheme. However, EE did not take any action in this regard and planned to construct HR in KRBHLRC which was fraught with delays at various levels as discussed above.

The execution of the project was delayed due to:

(i) Failure to process forest clearance in time,

42 Extension of time limit, excess work, relieving of contractors, other issues etc.

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(ii) Delay in acquisition of private land,

(iii) Delay in approval of design and

(iv) Poor planning regarding off take of water.

As a result, the intended benets of providing water at higher altitudes have not been met despite incurring expenditure of ` 4.15 crore.

The matter was reported to the Government in June 2016; their reply is awaited (October 2016).

3.8 Loss to the Government

Decision of the Department to delete standard tender clause 59A relating to price adjustment led to loss to the exchequer to the extent of ₹₹₹ 2.41 crore due to continuous decrease of RBI WPI for cement.

As per paragraph 193(3) of Gujarat Public Works Manual, standard form of contracts should be adopted wherever possible, the terms to be subject to adequate prior scrutiny. Clause 59A of the Standard tender conditions stipulates that the star rate for cement and steel to be brought by the contractor shall be considered ex-supply depot/ godown. The star rates are linked with Reserve Bank of India (RBI) wholesale price index (WPI) for steel and cement for the month in which the Draft Tender Papers (DTP) is approved. The uctuations in rates of cement and steel shall be adjusted in the bills payable to the contractor considering average corresponding index for steel/ cement for the quarter under consideration as published in monthly bulletin of RBI and cement/ steel actually brought by the contractor on site of work and consumed in the work during the quarter, duly supported with bills. This clause shall be operative from the date of issue of work order and up to the expiry of original and extended time limit.

In order to increase the capacity of canal to augment increased irrigation demands, the Water Resources Department accorded (December 2011) administrative approvals (revised in September 2013 and August 2014) for improvement work to Kakrapar Right Bank Main Canal (KRBMC) from 0 to 60.98 Km in eight packages and Ukai Right Bank Main Canal (URBMC) from 0 to 35.06 Km in four packages. The Department accorded (July 2013) technical sanctions and approved (July/ August 2013) DTPs for ₹ 135.71 crore for KRBMC and ₹ 63.30 crore for URBMC respectively. The Superintending Engineer (SE), at the time of submission (July 2013) of DTPs to the Department, deleted clause 59 and 59A relating to price variation and price adjustment respectively. The Department also, considering shorter period of works of six months, approved (July/ August 2013) DTPs without tender clause of price adjustment.

The Executive Engineers (EEs), KRBMC Division, Surat and URBMC Division, Ankleshwar issued work orders (November/ December 2013) with stipulated period of completion by May 2014 for a total cost of ₹ 152.23 crore for KRBMC and ₹ 71.25 crore for URBMC. The works of KRBMC and URBMC were completed (January 2014 and May 2014) and payment of



76

₹ 151.69 crore and ₹ 73.33 crore was made to the contractors between May 2014 and February 2015 respectively.

Audit observed (June 2014 and October 2015) that without any recorded reasons, SE had deleted the clause 59A of price adjustment from the DTPs. A comparison of the tendered cost to estimated cost revealed that in 9 out of 12 packages, the tendered cost exceeded the estimated cost by over 15 per cent. Further, during the period of execution of works, WPI of materials (cement) published by the RBI showed decreasing trend. Incidentally, due to non-inclusion of clause 59A, the Government could not get benet of the decreasing trend of WPI of materials and lost opportunity to recover price adjustment amount of cement from the contractors.

In reply, Government stated (July 2016) that the works were required to be completed during the closure period of the perennial canal and for this, large quantity of cement was required in very short period for completion of the works. It was presumed that the market price might go up and cement rate may increase, hence, inclusion of clause 59A might lead to loss to Government. The price index to be considered is quarterly i.e., at 90 days interval. Since works were to be completed in 78 days, it was considered that the price index may not have any impact on prices of cement. Looking to this aspect, clause 59A was deleted.

The reply of the Government is not convincing as the objective of nullifying the impact of uctuation in prices so as to enable the contractor to quote without any speculative calculation was not achieved due to deletion of the said clause. Further, works were awarded with time limit of 180 days (6 months) instead of 78 days. We also noticed that in illustrative works43 awarded between December 2012 and November 2013 by EE, KRBMC, Surat and EE, Surat Canal Division, Surat, the clause 59A was included for works of short duration of seven to 12 months and price variation recovered as per RBI’s WPI.

The very purpose of inserting price variation clause in the tender to nullify the impact of uctuation of market prices of these materials during contract period was defeated. Thus, the decision of the department to delete the price variation clause led to loss to the exchequer to the extent of ₹ 2.41 crore.

3.9 Non-recovery of liquidated damages

Failure of the Concessionaire to adhere to the approved specications in providing steel liner led to non-recovery of liquidated damages of ` 1.45 crore despite delay in the project execution by the Concessionaire.

For setting up of two Small Hydro Power (SHP) Stations (3 MW and 2.25 MW) to generate hydel power on Damanganga Reservoir, the WRD signed (August 2007) a Concession Agreement (CA) with M/s. Tarini Infrastructure

43 Providing protection work to canal section of Ubharat branch, M&R to Lajpur

distributory, Vanz minor and Talangpur minor, Construction of bridge/ Village Road Bridge on KRBMC.

77

Limited, New Delhi (the Concessionaire) on revenue sharing basis for a period of 35 years.

The Concessionaire had submitted Detail Project Report (DPR) in June 2006 for approval. The Central Design Organisation (CDO), WRD suggested (June 2006) providing steel liner inside the existing Reinforced Cement Concrete (RCC) penstock up to good anchorage length for connection/ anchorage to the dam body wall for increased velocity of water to generate more hydel power. The Government approved the DPRs in July 2007 for SHPs. The EE, Damanganga Project Division No.1, Madhuban Colony was in charge of project.

The Concessionaire was to complete the project within a period of 18 months i.e., by February 2009. The Independent Engineer (IE) issued completion certicate for both SHPs in February 2010 even though the Concessionaire had not provided steel liner in the Right Bank Head Regulator (RBHR) barrel and joined the turbine penstock directly to the Head Regulator concrete barrel in violation of the approved design by the WRD. The WRD noticed this deciency in October 2010, therefore directed (June 2011) the Concessionaire to adhere to the approved design and install steel liner inside the RCC duct of RBHR within three months.

However, the Concessionaire submitted (June 2011) a proposal for use of Glass-bre Reinforced Plastic (GRP) pipe on the grounds of equal merits and easy handling. The CDO approved (August 2011) use of GRP pipes subject to the condition that the WRD should obtain necessary undertaking from the Concessionaire for inspection, repairs or replacement (partly/ whole) of GRP unconditionally as and when required. The same was installed by the Concessionaire.

However, when water was released (October 2012) for irrigation, the GRP pipes with RCC barrel were found damaged at the time of closure of canal and therefore, EE directed (January 2013) the concessionaire to install steel liner. The concessionaire started (June 2013) installation of steel liner after approval from CDO and commissioned the SHPs in November 2013. The IE issued (December 2013) completion certicate for SHP-2.

As the project was delayed, the Concessionaire requested (September 2013) ‘Extension of Time Limit’ (EOTL) based on Force Majeure provisions of the CA. However, the EE under Clause 5.10 of the CA, sent (November 2013) a proposal for levy of Liquidated Damages (LD) of ₹ 1.45 crore for the period of delay of four years (2009-13) for approval to compensate revenue loss to the WRD. However, the WRD approved (November 2013) the proposal of the EOTL on the plea that delay was beyond the control of WRD as well as the Concessionaire. The WRD also stated that there was no provision in the CA for levy of penalty for delay in the completion of the Project. Hence, question of revenue loss does not arise.

Audit observed (February 2013) that the Concessionaire did not provide steel lining in RBHR barrel which was a deviation from technical specication. Further, without verifying the installation of steel liner inside the RCC duct,



78

the IE also issued (February 2010) completion certicate. Only on the direction of the Department, the concessionaire agreed to install GRP penstock. However, due to damage in installed GRP, power generation could not start and only on providing steel liner the power generation started from November 2013. Thus, the delay of 39 months (from August 2010 to November 2013) in commissioning the project was attributable to the Concessionaire only and there was no event or circumstance for invoking Force Majeure. Further, the delay also resulted in non-generation of 6.30 crore units during August 2010 to November 2013 as worked out by the Department. Therefore, liquidated damages of ` 1.45 crore44 was required to be recovered from the Concessionaire.

The Government stated (August 2016) that the Concessionaire was required to provide steel liner inside RCC barrel, but the Concessionaire provided GRP liner which was found damaged and ultimately the Concessionaire installed steel liners. As such non-providing suitable type of liner inside the barrel was the main cause of delay in commencing hydropower generation which was approved by the Government.

The reply is not tenable as the delay in completion of the project was due to non-adherence of the approved design by the Concessionaire. Thus, the failure of the Concessionaire to adhere to the approved specications in providing steel liner compounded by wrong approval by the IE had resulted in delays of more than 39 months in the project warranting levy of liquidated damages of ` 1.45 crore.

3.10 Avoidable expenditure on contract demand

Inefcient use of electrical energy in operation of Botad pumping station led to avoidable payment of ₹ 6.84 crore on contract demand charges.

To operate and maintain Pumping Station, the High Tension (HT) electricity connection from Electricity Company is required to be obtained. As per provision in the tariff schedule of Electricity Company, monthly billing demand (MBD) charges are recoverable on the higher of (a) actual maximum demand established during the month or (b) 85 per cent of the Contract Demand (CD). For 66 Kilo Volt s (KV) substation, the minimum recommended CD was 4,100 Kilo Volt s Ampere (KVA) .

The Government accorded (October 2011) administrative approval to the project of lift pipeline from Botad Branch Canal (BBC) near chainage 47,815 meter (m) to Goma Reservoir and gravity canal to Sukhbhadar and Kaniyad dams and Krishnasagar Lake. The pipelines were to be laid from BBC to Paliyad and from Paliyad to Goma Canal. To lift the water from BBC near chainage 47,815 m, a pumping station was to be constructed. The EE, Bhavnagar Irrigation Project Division, Bhavnagar awarded the work in April 2012 which was completed in May 2014 at a cost of ₹ 137.46 crore.

44 2600 (Capacity) x 24 hours x 1010 days = 6.33 crore units x 0.23 (rupees) = ₹ 1.45 crore.

79

The Division entered into an agreement with Paschim Gujarat Vij Company Limited (PGVCL) in February 2013 for supply of 12,500 KVA power to Botad Pumping Station (BPS) and power supply commenced in June 2013. The actual demand remained between 18 to 2,898 KVA which was 0.14 to 23 per cent of CD from July 2013 to March 2016. Therefore, MBD was raised for 10,625 KVA (85 per cent of 12,500 KVA) and the Division paid demand charges of ` 9.78 crore from June 2013 to March 2016.

From the review of electricity bills, audit observed that actual demand continuously remained below 85 per cent of the CD. However, the Department had not assessed the actual requirement of power. In fact, considering the power demand registered during June 2013 to March 2016, the minimum CD of 4,100 KVA prescribed for 66 KV was sufcient to serve the requirement of the Division, which could have saved ₹ 6.84 crore as MBD charges.

Government stated (September 2016) that it was anticipated that full required supply of water would be available at lifting points and accordingly, CD was sought for full capacity of pumps. However, after detailed study of availability of water at source, the proposal for reducing CD would be initiated. The reply indicates that contract demand xed was not based on proper planning.

(GURVEEN SIDHU) Accountant General Ahmedabad (Economic & Revenue Sector Audit) Gujarat The

Countersigned

(SHASHI KANT SHARMA) New Delhi Comptroller and Auditor General of India The



80

APPENDICES

Appendices

81

APPENDIX I

(Reference: Paragraph No. 1.7.1)

Year-wise breakup of outstanding Inspection Reports as on 30 September 2016 Sl. No.

Department Upto 2011-12

2012-13 2013-14 2014-15 2015-16 Total

No. of

IRs

No. of

Paras

No. of

IRs

No. of

Paras

No. of

IRs

No. of Paras

No. of

IRs

No. of

Paras

No. of

IRs

No. of Paras

No. of

IRs

No. of Paras

1. Agriculture & Co-operation

37 83 7 26 20 96 26 111 20 99 110 415

2. Energy & Petrochemicals

1 5 0 0 1 3 1 6 3 11 6 25

3. Finance 2 2 1 3 1 1 2 4 2 11 8 21

4. Forests & Environment

5 8 2 3 26 85 13 51 6 28 52 175

5. Industries & Mines

30 114 2 5 16 55 6 14 14 79 68 267

6. Narmada, Water Resources, Water Supply & Kalpsar (except Water Supply)

33 77 60 163 35 96 51 136 19 77 198 549

7. Ports & Transport 5 8 0 0 1 4 2 7 5 26 13 45

8. Roads & Buildings 29 100 35 121 37 122 31 118 16 65 148 526

9. Science & Technology

1 5 1 4 1 5 2 10 0 0 5 24

10. Climate Change 0 0 0 0 0 0 0 0 1 9 1 9

Total 143 402 108 325 138 467 134 457 86 405 609 2,056


82

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Appendices

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135

9 5

4 2

500

537

0 1

074

Audit Report (Economic Sector) for the year ended 31 March 2016- Report No. 6 of 2016

84

S

l.

No

. N

am

e o

f P

roje

ct

201

1-12

2

012

-13

201

3-1

4 2

014

-15

201

5-1

6 C

CA

cr

eate

d

(in

ha

)

To

tal

of

v

e y

ears

C

CA

a

chie

ved

(i

n h

a)

Ave

rag

e C

CA

a

chie

ved

(i

n h

a)

CC

A

crea

ted

(i

n h

a)

CC

A

ach

ieve

d

(in

ha

)

Irri

gat

ion

(in

p

erce

nta

ge)

CC

A

crea

ted

(i

n h

a)

CC

A

ach

ieve

d

(in

ha)

Irri

gati

on

(in

p

erce

nt

age

)

CC

A

crea

ted

(in

h

a)

CC

A

ach

ieve

d

(in

ha)

Irri

gat

ion

(in

p

erce

nta

ge)

CC

A

crea

ted

(i

n h

a)

CC

A

ach

ieve

d

(in

ha

)

Irri

gat

ion

(in

p

erce

nta

ge)

CC

A

crea

ted

(i

n h

a)

CC

A

ach

ieve

d

(in

ha

)

Irri

gat

ion

(in

p

erce

nta

ge)

48

Shi

ngo

da

672

5 1

278

19

672

5 0

0 6

725

182

9 2

7 6

725

165

6 2

5 6

725

965

1

4 6

725

572

8 1

145

.6

49

Mac

hhu

ndri

8

095

601

7

809

5 0

0 8

095

604

7

809

5 6

71

8 8

095

601

7

809

5 2

477

495

.4

50

Rav

al

486

0 2

05

4 4

860

0 0

486

0 4

11

8 4

860

336

7

486

0 2

05

4 4

860

11

57

231

.4

51

Kal

ind

ri

210

5 2

27

11

210

5 1

3 0

210

5 2

66

13

210

5 2

07

10

210

5 0

0 2

105

713

1

42.6

Tot

al

274

902

9

640

2 3

5 2

749

02

149

38

5 2

749

02

922

23

34

274

902

4

288

6 1

6 2

749

02

846

76

31

274

902

3

311

25

662

25

52

Bha

dar

2

718

0 8

32

12

870

0 2

636

30

920

2 0

0 9

202

261

3

718

0 0

0 8

293

372

9 7

45.8

53

Oza

t 2

150

0 6

57

44

440

0 4

40

10

440

0 6

60

15

491

8 9

60

20

491

8 3

97

8 4

027

311

4 6

22.8

Gra

nd

Tot

al

283

582

9

789

1 3

5 2

880

02

180

14

6 2

885

04

928

83

32

289

022

4

410

7 1

5 2

870

00

850

73

30

287

222

3

379

68

675

93.

6

Appendices

85

APPENDIX III

(Reference: Paragraph No. 2.9.1.1)

Details of Silt survey and siltation level in Medium Irrigation Projects in Saurashtra region

Sl. No.

Name of Project

Year of project

constructed

Year of silt

survey done

Designed capacity

(in Mcum)

Present capacity

(in Mcum)

Reduction in per cent

Reduction in capacity

Details of disilting done during 2010-16 (Qty. in Cum) Estimated Quantity

Executed Quantity

Medium Irrigation Projects

1 Khodiyar 1967 1986 40.35 29.94 26 10.41 5,44,578 4,12,456

2 Munjiyasar 1957 1986 14.73 13.65 7 1.08 3,28,470 3,15,465

3 Malan 1954 1986 16.17 11.44 29 4.73 3,06,616 3,56,600

4 Limbadi-Bhogavo 1

1962 1986 29.39 22.43 24 6.96 7,80,500 6,96,707

5 Chhaparwadi 2 1980 1986 17.26 16.62 4 0.64 8,73,890 8,73,890

6 Demi 2 1989 1986 21.38 21.33 0 0.05 4,61,712 4,61,712

7 Vartu 1 1968 1986 13.87 11.79 15 2.08 4,69,050 4,16,700

8 Gondali 1956 1986 15.81 10.11 36 5.7 11,23,010 11,23,010

9 Hiran 1 1959 1986 21.65 20.23 7 1.42 0 0

10 Madhuvanti 1976 1986 12.15 11.66 4 0.49 50,700 64,508

11 Jhanjesri 1975 1986 10.63 10.04 6 0.59 1,01,400 1,23,541

12 Sorthi 1975 1986 9.92 8.03 19 1.89 0 0

13 Rojki 1965 1987 12.02 9.23 23 2.79 2,16,460 81,000

14 Dhatarvadi I 1974 1988 32.65 26.93 18 5.72 29,800 29,800

15 Bhimdad 1953 1989 11.19 6.79 39 4.4 3,50,014 2,55,000

16 Ghelo(S) 1963 1990 8.12 6.1 25 2.02 2,81,728 2,17,428

17 Goma 1973 1990 18.25 15.75 14 2.5 6,80,366 5,44,350

18 Rajawal 1980 1996 33.01 28.21 15 4.8 3,52,200 3,30,401

19 Sani 1995 2001 69.05 39.01 44 30.04 2,96,900 2,30,195

20 Moj 1956 2001 52.98 36.69 31 16.29 3,70,000 3,70,000

21 Phophal 1 1979 2001 59.61 51.83 13 7.78 2,20,000 2,20,000

22 Wadhwan- Bhogavo 1

1959 2001 19.51 13.71 30 5.8 3,83,600 4,08,451

23 Aji 1 1954 2001 32.28 26.42 18 5.86 17,64,921 17,64,921

24 Demi 1 1958 2002 21.52 16.62 23 4.9 4,70,000 4,70,000

25 Sasoi 1954 2003 51.00 37.97 26 13.03 5,20,458 4,01,796

26 Fulzar 1 1961 2003 14.90 11.36 24 3.54 4,39,628 3,15,933

Total 659.40 513.89 145.51 1,14,16,001 1,04,83,864


86

A

PP

EN

DIX

IV

(Ref

eren

ce:

Par

agra

ph

No

. 2.1

0.1

)

Det

ails

sh

ow

ing

th

e li

ned

an

d u

nli

ned

can

al

net

wor

k o

f M

ediu

m I

rrig

atio

n p

roje

cts

(Len

gth

in

kil

om

etre

(K

m))

S

l.

No.

N

ame

of p

roje

ct

Det

ails

of

Can

al

Det

ails

of

lin

ed C

anal

D

etai

ls o

f u

nli

ned

Can

al

Mai

n

Can

al

Bra

nch

C

anal

D

istr

ibu

tary

M

inor

M

ain

C

anal

B

ran

ch

Can

al

Dis

trib

uta

ry

Min

or

Mai

n

Can

al

Bra

nch

C

anal

D

istr

ibu

tary

M

inor

1

Kho

diy

ar

11.2

8 1

2.0

9 4

9.4

6 2

0.0

2 11

.28

12.

09

0

0

49.

46

20.

02

2

Vad

i C

anal

net

wo

rk i

s u

nde

r co

nst

ruct

ion

and

lin

ing

wo

rk i

s ta

ken

alo

ng

wit

h c

anal

co

nst

ruct

ion

.

3

Dha

tarw

adi

2

Can

al n

etw

ork

is

un

der

con

stru

ctio

n a

nd l

inin

g w

ork

is

take

n a

lon

g w

ith

can

al c

on

stru

ctio

n.

4

Mu

nji

yasa

r 1

4.4

7 -

33.2

6 -

14.

47

- -

- -

- 3

3.2

6 -

5

Han

ol

C

anal

net

wo

rk n

ot

cons

tru

cted

6

Raj

awal

2

.45

- -

- 2

.45

- -

- -

- -

-

7

Mal

an

11.5

4 -

22.5

4 -

11.5

4 -

- -

- -

22.

54

-

8

Ro

jki

12.

07

- 1

4.8

3 -

12.

07

- 11

.63

- -

- 3

.20

-

9

Dha

tarv

adi-

1

3.0

8 -

26.0

0 -

- -

- -

3.0

8 -

26.

00

-

10

Bh

imda

d

12.

00

- 2

2.0

0 -

- -

- -

12.

00

- 2

2.0

0 -

11

Gh

elo(

S)

19.

30

- 3

2.0

0 -

- -

- -

19.

30

- 3

2.0

0 -

12

Gh

elo(

I)

13

Kal

ub

har

14.

50

3

7.3

0 -

14.

50

- 3

7.3

0 -

- -

- -

14

Ran

ghgo

la

32.

50

- 5

6.0

0 -

32.

50

- 5

6.0

0 -

- -

- -

15

Go

ma

12.

00

- 2

2.0

0 -

12.

00

- 2

2.0

0 -

- -

- -

16

Su

khbh

adar

1

5.4

6 -

102

.00

- 1

5.4

6 -

102

.00

- -

- -

-

17

Aji

-4

11.7

8 -

- 2

7.0

0 11

.78

- -

27.

00

- -

- -

18

Und

-2

13.

52

- -

84.

88

11.0

7 -

- 3

2.4

9 2

.45

- -

52.

39

19

Var

tu-2

2

1.2

6 -

- 3

1.1

0 2

1.2

6 -

- -

- -

- 3

1.1

0

20

San

i 1

4.4

9 -

- -

- -

- -

14.

49

- -

-

21

Lim

bad

i B

hoga

vo-2

1

.90

- -

15.

13

- -

- -

1.9

0 -

- 1

5.1

3

22

Bh

adar

-2

32.

31

- 2

1.5

8 -

32.

31

- 2

1.5

8 -

- -

- -

Appendices

87

Sl.

N

o.

Nam

e of

pro

ject

D

etai

ls o

f C

anal

D

etai

ls o

f li

ned

Can

al

Det

ails

of

un

lin

ed C

anal

M

ain

C

anal

B

ran

ch

Can

al

Dis

trib

uta

ry

Min

or

Mai

n

Can

al

Bra

nch

C

anal

D

istr

ibu

tary

M

inor

M

ain

C

anal

B

ran

ch

Can

al

Dis

trib

uta

ry

Min

or

23

Mac

hh

u-3

C

anal

net

wo

rk i

s n

ot

con

stru

cted

24

Oza

t-2

1

0.6

0 -

13.

63

- 1

0.6

0 -

13.

63

- -

- -

-

25

Mo

j 2

3.1

6 2

0.9

9 4

1.8

7 -

23.

16

20.

99

41.

87

- -

- -

-

26

Aji

3

24.

65

- -

58.

60

24.

65

- -

58.

60

- -

- -

27

Ven

u 2

7

.98

- 1

0.6

9 6

4.8

2 7

.98

- 1

0.6

9 6

4.8

2 -

- -

-

28

Ph

opha

l1

15.

24

- 1

0.0

7 4

5.7

2 1

5.2

4 -

10.

07

- -

- -

45.

72

29

Lim

bd

i B

hog

avo

1

30.

00

- 2

9.8

2 -

- -

- -

30.

00

- 2

9.8

2 -

30

Sas

oi

23.

66

- 2

7.0

6 -

- -

- -

23.

66

- 2

7.0

6 -

31

Ch

hapa

rwad

i- 2

1

.58

- 11

.20

- 1

.58

- 3

.00

- -

- 8

.20

-

32

Wad

hw

an B

hoga

vo 1

1

5.2

4 -

28.

26

- 1

2.0

0 -

9.1

2 -

3.2

4 -

19.

14

-

33

Dem

i 1

1

8.9

9 -

27.

02

- -

- -

- 1

8.9

9 -

27.

02

-

34

Dem

i 2

1

0.0

6 -

2.2

5 2

0.0

8 1

0.0

6 -

2.2

5 2

0.0

8 -

- -

-

35

Var

tu 1

1

6.8

5 -

11.0

3 -

- -

- -

16.

85

- 11

.03

-

36

Aji

2

15.

55

- -

24.

56

15.

55

- -

24.

56

- -

- -

37

Sab

uri

7.3

5 -

- 1

5.7

1 -

- -

- 7

.35

- -

15.

71

38

Fu

lzar

1

22.

46

- 1

9.8

7 -

- -

- -

22.

46

- 1

9.8

7 -

39

Go

nda

li

13.

50

- 1

6.9

0 -

6.0

0 -

- -

7.5

0 -

16.

90

-

40

Aji

-1

No

cana

l as

it

is t

reat

ed a

s a

wat

er s

upp

ly p

roje

ct.

41

Hir

an 1

1

5.9

4 -

15.

98

5.7

9 1

0.3

7 -

10.

60

5.7

4 5

.57

- 5

.38

0.0

5

42

Hir

an 2

1

6.6

8 -

16.

99

50.

34

16.

68

- 3

.07

12.

66

- -

13.

92

37.

68

43

Mad

huva

nti

1

.42

- 2

1.7

6 5

.15

- -

15.

21

3.9

0 1

.42

- 6

.55

1.2

5

44

Jhan

jesr

i 7

.16

- -

19.

39

7.1

6 -

- 1

5.9

7 -

- -

3.4

2

45

Dha

rfad

5

.46

- -

19.

09

5.4

6 -

- 1

9.0

9 -

- -

-

46

Oza

t W

eir

(An

andp

ur)

2

2.0

0 8

.50

- -

22.

00

8.5

0 -

- -

- -

-

47

Ube

n 7

.69

- -

23.

90

7.6

9 -

- 2

3.9

0 -

- -

-

48

Sh

ingo

da

10.

80

2.7

7 1

7.0

1 4

6.6

0 1

0.8

0 -

17.

01

7.6

0 -

2.7

7 -

39.

00


88

S

l.

No.

N

ame

of p

roje

ct

Det

ails

of

Can

al

Det

ails

of

lin

ed C

anal

D

etai

ls o

f u

nli

ned

Can

al

Mai

n

Can

al

Bra

nch

C

anal

D

istr

ibu

tary

M

inor

M

ain

C

anal

B

ran

ch

Can

al

Dis

trib

uta

ry

Min

or

Mai

n

Can

al

Bra

nch

C

anal

D

istr

ibu

tary

M

inor

49

Mac

hh

undr

i 3

2.4

2 -

- 2

46.5

6 3

2.4

2 -

- 2

46.5

6 -

- -

-

50

Rav

al

14.

70

- 1

2.7

4 1

6.5

0 1

4.7

0 -

12.

74

16.

50

- -

- -

51

Kha

ro

2.1

6 -

- -

2.1

6 -

- -

- -

- -

52

So

rthi

N

A

NA

N

A

NA

N

A

NA

N

A

NA

N

A

NA

N

A

NA

53

Dem

i 3

5

.55

- -

11.9

1 5

.55

- -

11.9

1 -

- -

-

54

Am

ipur

1

5.0

0 -

- 7

.80

- -

- -

15.

00

- -

7.8

0

55

Kal

ind

ri

8.8

4 -

- 7

.53

2.5

0 -

- -

6.3

4 -

- 7

.53

56

Uta

vali

(G

und

a)

- -

- -

- -

- -

- -

- -

T

otal

6

83.5

6 4

4.3

5 7

73.2

7 8

68.1

8 4

86.6

0 4

1.5

8 3

99.7

7 5

94.6

2 1

96.9

6 2

.77

373

.50

273

.56

Appendices

89

APPENDIX V

(Reference: Paragraph No. 3.1.3 and 3.1.3.1)

Assistance given under Critical Infrastructure Project Scheme during 2009-15

Sl. No.

Project Implementation Agency ₹ in crore

1 Gujarat Industrial Development Corporation 440.25 2 Uttar Gujarat Vij Company Limited 40.00 3 Roads and Buildings Division, Bharuch 101.52 4 Surat Municipal Corporation 28.33 5 Gujarat Pipavav Port Limited 20.00 6 Shapar Veraval Industrial Association, Veraval 6.45 7 Gujarat Power Corporation Limited 56.39 8 Gujarat Energy Transmission Corporation Limited 20.00 9 Bharuch Udhyog Nagar Sahkari Sangh Limited 0.96 10 District Industries Centre, Bharuch 66.34 11 Design Tech System, Pune 153.90 12 Indext - B (Siemens CoE) 44.72 13 Dholera SIR Development Authority 26.00 14 Gujarat State Road Development Corporation 20.00 15 Roads and Buildings Division, Ahmedabad 18.58 16 District Industries Centre, Bhuj 13.41 17 Roads and Buildings Division, Rajkot 13.19 18 Surat Urban Development Authority 13.00 19 Dakshin Gujarat Vij Company Limited 12.08 20 Gujarat Mineral Development Corporation Limited 12.00

21 Electronics and Quality Development Corporation, Gandhinagar 11.57

22 GIFT City 10.71 23 Sardar Sarovar Narmada Nigam Limited 8.15 24 Pandit Din Dayal Petroleum University 7.50 25 Sardar Sahkari Udyog Nagar Limited, Vadodara 5.13

26 Panchratna Industrial Development Works Limited, Changodar 4.52

27 District Industries Centre, Surat 4.28 28 Roads and Buildings Division, Vadodara 4.12 29 Irrigation Department, Ahmedabad 3.61 30 Bharuch Dahej Railway Company Limited 4.00 31 Dahej SEZ Limited 3.41 32 Indo German Tool Room, GIDC, Vatva 2.59 33 Changodar Industrial Estate Association Private Limted 2.19 34 Palsana Enviro Protection Limited 2.16 35 Lalpar Industrial Development Association, Morbi 2.04 36 CEPT University 2.00 37 CII - Confederation of Indian Industry, Ahmedabad 2.00 38 Gujarat Foundation for Entrepreneurial Excellence 2.00 39 Anand Agricultural University 1.77 40 Jamnagar Urban Development Authority 1.54 41 Bhavnagar Energy Company Limited 1.30 42 Tatithaiya Infrastructure Development Private Limited 1.29 43 Indian Institute of Technology 1.23 44 Gokul Refoils and Solvent Limited, Kachchh 1.00

Audit Report (Economic Sector) for the year ended 31 March 2016 – Report No.6 of 2016

90

Sl. No.

Project Implementation Agency ₹ in crore

45 IIT, Gandhinagar 1.00 46 Khamir, Centre for Kachchh Heritage, Bhuj 1.00 47 M S University Vadodara and CIPET Ahmedabad 1.00 48 Mantra, Surat 1.00 49 Narmada Clean Tech Limited 1.00

50 Centre of Excellence (CoE) in Drug Discovery, Saurashtra University, Rajkot 1.00

51 Nandesari Industries Association, Vadodara 0.98 52 Southern Gujarat Chamber of Commerce 0.98 53 ITI, Narsali, Vadodara 0.81 54 District Industries Centre, Navsari 0.55 55 District Industries Centre, Surendranagar 0.37

56 Southern Gujarat Chamber of Commerce, SPV, Sar Infracon Limited 0.25

57 Centre for Entrepreneurship Development, Gandhinagar 0.22 58 Jamnagar Sahkari Udyog Sangh 0.05 Total 1,141.10

Appendices

91

AP

PE

ND

IX V

I

(Ref

eren

ce:

Pa

ragr

aph

No.

3.1

.3.1

)

Co

mp

lian

ce t

o gu

idel

ines

of

the

CIP

Sch

eme

by

the

Pro

ject

Im

ple

men

tati

on A

gen

cies

Sl.

N

o.

Na

me

of t

he

pro

ject

S

ub

mis

sio

n

of

un

der

tak

ing

Ap

poi

ntm

ent

of

TP

QA

S

ub

mis

sion

of

Det

aile

d

Pro

ject

R

epo

rt

Arr

an

gem

ent

for

Op

era

tio

n a

nd

M

ain

ten

an

ce o

f th

e p

roje

ct

Cre

ati

on

of

up

- g

rad

atio

n

fun

d

Su

bm

issi

on

of

per

iod

ic

pro

gres

s re

po

rt

Su

bm

issi

on

of

uti

liza

tion

ce

rti

cate

Co

mp

leti

on

of

pro

ject

w

ith

in t

ime

lim

it

Su

bm

issi

on

o

f co

mp

leti

on

cert

ica

te

Pro

ject

Im

ple

men

tati

on

Ag

ency

1

Wid

enin

g of

Vag

ra,

Pak

hana

j an

d R

ahiy

ad r

oad

fro

m 0

to

13

.50

km

(P

art-

1)

& 1

3.5

0 t

o 2

7 km

No

N

ot

avai

lab

le

on

reco

rd

No

N

ot

avai

lab

le o

n re

cord

N

o

No

N

o

No

co

mpl

etio

n ce

rti

cate

su

bm

itte

d

No

Roa

ds

and

Bui

ldin

gs

(R&

B)

Div

isio

n, B

haru

ch

2

220

KV

Sub

-sta

tio

n an

d tr

ansm

issi

on

netw

ork

at

Abd

asa

talu

ka K

achc

hh

Dis

tric

t

No

N

ot

avai

lab

le

on

reco

rd

No

N

ot

avai

lab

le o

n re

cord

N

o

No

N

o

Wor

k un

der

pro

gres

s W

ork

unde

r p

rogr

ess

Guj

arat

Ene

rgy

Tra

nsm

issi

on

Cor

por

atio

n L

imit

ed

3

Ext

ensi

on

of

11

KV

LT

Lin

e N

etw

ork

inc

ludi

ng e

rect

ion

of

11 K

V

S/s

, ea

rthli

ng,

RM

U,

MS

P,

RC

C

tren

ch a

nd b

rick

tre

nch

in A

V a

rea

No

N

ot

avai

lab

le

on

reco

rd

No

N

ot

avai

lab

le o

n re

cord

N

o

No

N

o

No

co

mpl

etio

n ce

rti

cate

su

bm

itte

d

No

Utt

ar G

ujar

at V

ij C

om

pan

y L

imit

ed

4

Con

stru

ctio

n o

f ce

men

t co

ncr

ete

road

in

Pan

des

ara

GID

C a

rea

at S

urat

N

o

No

t av

aila

ble

o

n re

cord

Y

es

No

t av

aila

ble

on

reco

rd

No

N

o

No

N

o

com

plet

ion

cert

ica

te

sub

mit

ted

No

Sur

at M

unic

ipal

Cor

pora

tion

5

Wid

enin

g of

8 d

iffe

ren

t ro

ads

of

Vag

ra t

alu

ka o

f B

har

uch

dist

rict

N

o

No

t av

aila

ble

o

n re

cord

N

o

No

t av

aila

ble

on

reco

rd

No

N

o

No

Y

es

Yes


92

S

l.

No

. N

am

e of

th

e p

roje

ct

Su

bm

issi

on

of

un

der

tak

ing

Ap

poi

ntm

ent

of

TP

QA

S

ub

mis

sion

of

Det

aile

d

Pro

ject

R

epo

rt

Arr

an

gem

ent

for

Op

era

tio

n a

nd

M

ain

ten

an

ce o

f th

e p

roje

ct

Cre

ati

on

of

up

- g

rad

atio

n

fun

d

Su

bm

issi

on

of

per

iod

ic

pro

gres

s re

po

rt

Su

bm

issi

on

of

uti

liza

tion

ce

rti

cate

Co

mp

leti

on

of

pro

ject

w

ith

in t

ime

lim

it

Su

bm

issi

on

o

f co

mp

leti

on

cert

ica

te

Pro

ject

Im

ple

men

tati

on

Ag

ency

R&

B D

ivis

ion,

Bha

ruch

6

46

km

ro

ad i

n S

hap

ar V

erav

al

Indu

stri

al A

ssoc

iati

on (

SV

IA)

No

N

ot

avai

lab

le

on

reco

rd

No

N

ot

avai

lab

le o

n re

cord

N

o

Yes

P

rogr

ess

rep

ort

su

bm

itte

d

Wor

k un

der

pro

gres

s W

ork

unde

r p

rogr

ess

SV

IA

7

Co

nstr

ucti

on

of

ove

r bri

dge

near

B

haru

ch C

hava

j ra

ilw

ay l

ine

No

N

ot

avai

lab

le

on

reco

rd

No

N

ot

avai

lab

le o

n re

cord

N

o

No

N

o

No

co

mpl

etio

n ce

rti

cate

su

bm

itte

d

No

R&

B D

ivis

ion,

Bha

ruch

8

Ro

ad u

p g

rad

atio

n at

Guj

arat

So

lar

Par

k at

Jam

vad

a-F

angl

i-C

hara

naka

road

– P

atan

No

N

ot

avai

lab

le

on

reco

rd

No

N

ot

avai

lab

le o

n re

cord

N

o

No

N

o

No

co

mpl

etio

n ce

rti

cate

su

bm

itte

d

No

Guj

arat

Po

wer

Cor

pora

tion

Lim

ited

9

Wid

enin

g of

Der

ol-

Vag

ra-G

andh

ar

road

(0

km t

o 3

4.4

km

) N

o

No

t av

aila

ble

o

n re

cord

N

o

No

t av

aila

ble

on

reco

rd

No

N

o

No

N

o

com

plet

ion

cert

ica

te

sub

mit

ted

No

R&

B D

ivis

ion,

Bha

ruch

10

Ap

pro

ach

road

co

nnec

ting

nat

iona

l hi

gh

way

to

Guj

arat

Pip

avav

Por

t N

o

Yes

Y

es

No

N

o

Yes

N

o

Yes

Y

es

Guj

arat

Pip

avav

Port

Lim

ited

11

Rai

n W

ater

Har

ves

ting

in

Bho

lav,

B

haru

ch

N

o

No

N

o

No

N

o

No

N

o

Wor

k un

der

pro

gres

s W

ork

unde

r p

rogr

ess

Bha

ruch

Ud

hyo

gnag

ar S

ahka

ri

San

gh L

imit

ed

Appendices

93

APPENDIX VII

(Reference: Paragraph No. 3.2.3 and 3.2.3.1)

Status of Captive Jetty Agreements entered by GMB as on 31 March 2016

Sl. No.

Name of the Captive Jetty Holder Place Date of Signing of CJA

Date of start of Cargo

operation

CJAs where capital cost of construction is approved 1 Gujarat Ambuja Cement Limited Magdalla 8 December 1999 July 1994 2 Essar Steel Sponge Iron Limited Magdalla 1 November 2000 October 1989

3 Reliance Industries Limited, SBM Magdalla 11 August 1999 December 1995 4 Digvijay Cement Company Limited Sikka 20 September 1999 1973-74 5 Reliance Port and Terminal Limited

(RPTL)-Roll on- Roll off Jetty Sikka 28 February 2000 November 1997

6 Dahej Harbour Infrastructure Limited Dahej 11 August 1999 December 1998 7 Reliance Industries Limited

(erstwhile IPCL ) Dahej 16 March 2000 November 1996

8 GACL, New and old Jetty Muldwarka 17 June 2000 September 1993 9 Ultratech Cement Limited Kovaya 28 February 2000 May 1997 10 Reliance Port and Terminal Limited

(RPTL)- 4 Tanker Berths Sikka 28 July 1999 July 1999

11 Reliance Industries Limited- 2 SBM (1 & 2)

Sikka 28 July 1999 September 1999

12 Larsen and Turbo Limited. Roll on-Roll off Jetty

Magdalla 25 October 2000 August 1993

CJAs where cost verication was in progress 13 Essar Steel Sponge Iron Limited -

Sponge Iron 2nd Extension Magdalla 25 March 2010 May 2010

14 Essar LPG Jetty Magdalla 1 November 2000 April 2001 15 Reliance Industries Limited-Ethylene

Jetty Magdalla 11 August 1999 March 1991

16 Reliance Industries Limited-EDC cum Roll on-Roll off Jetty

Magdalla 11 August 1999 February 1996

17 Reliance Industries Limited-Second Gas Jetty

Magdalla 11 August 1999 November 1997

18 Sanghi Industries Sponge Iron Limited

Jakhau 29 October 2002 May 2002

CJAs where information was not furnished 19 Essar Steel Sponge Iron Limited -

Sponge Iron 1st Extension Magdalla 12 February 2009 March 2009

20 Reliance Port and Terminal Limited (RPTL)-SBM 3,4 & 5

Sikka 19 May 2010 October 2007, May 2008 & November 2008

21 Reliance Port and Terminal Limited (RPTL)- Fifth Berth

Sikka 20 April 2011 April 2011

CJAs where no Set-off of capital cost was allowed 22 ABG Cement Limited Jakhau 5 January 2012 Not yet started 23 Jay Prakash Associates Jakhau 21 May 2012 May 2012 24 Bharat Oman Renery Limited Sikka 15 January 2010 November 2011 25 Cairn Energy (India) Private Limited Bhogat Not Available Not yet started


94

A

PP

EN

DIX

VII

I

(Ref

eren

ce:

Pa

ragr

aph

No.

3.2

.3.3

)

Un

du

e fa

vou

r to

exi

stin

g C

apti

ve J

etty

hol

der

s (M

arch

201

5) d

ue

to r

edu

ctio

n o

f w

har

fage

rat

es u

nd

er S

oPC

201

2

Sl.

N

o.

Ca

pti

ve

Jet

ty

Ho

lder

P

ort

P

rod

uct

R

ate

s u

nd

er

SoP

C

200

3 a

fter

se

t-o

ff

(In

`)

Ra

tes

un

der

S

oPC

201

2 af

ter

set-

off

(In

`)

Dif

fere

nce

(I

n `

) C

arg

o h

and

led

(In

la

kh

ton

nes

) lo

ss

(`

in

lak

h)

20

12-

13

(Fro

m

Au

gust

2

012)

20

13-

14

20

14-

15

Tot

al

(A)

(B)

(C )

(D

) (E

) (F

) =

(D

)-(E

) (G

) (H

) (I

) (J

)=

(G)

+ (

H)

+ (

I)

(K)

=

(J)x

(F)

1

Guj

arat

A

mb

uja

Cem

ent

Lim

ited

(G

AC

L)

Mag

dall

a C

emen

t 3

8 2

8 1

0 5

.18

7.3

3 7

.28

19.

79

197

.90

2

Ess

ar

Ste

el

Spo

nge

Ir

on L

imit

ed

Mag

dall

a S

teel

6

8 5

6 1

2 8

.85

14.

97

14.

13

37.

95

455

.44

3

Dig

vija

y C

emen

t C

om

pan

y L

imit

ed

Sik

ka

Cem

ent

38

28

10

1.3

9 1

.16

0.6

0 3

.15

31.

47

4

L&

T

Cem

ent

Lim

ited

Ja

frab

ad

Cem

ent

38

28

10

15.

67

24.

25

27.

55

67.

47

674

.73

5

Rel

ianc

e In

dus

trie

s L

imit

ed

Dah

ej

liqu

id

chem

ical

s 7

7 6

4 1

3 0

.15

0.2

0 0

.31

0.6

6 8

.54

6

GA

CL

M

uld

war

ka

Cem

ent

38

28

10

23.

01

31.

03

32.

54

86.

58

865

.77

7

Rel

ianc

e In

dus

trie

s L

imit

ed,

SB

M 1

& 2

S

ikka

Cru

de

oil

3

6 1

8 1

8 2

20.3

4 3

46.8

3 3

22.0

1 8

89.1

8 1

6,0

05.2

4

To

tal

1

8,2

39.0

8

©

COMPTROLLER AND

AUDITOR GENERAL OF INDIA www.cag.gov.in

www.paggujarat.gov.in

Documents

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