Kaleshwaram project economically unviable, says CAG report

The cost of the project is now likely to exceed Rs 1,47,427.41 crore, as against the cost of Rs 81,911.01 crore projected to the Central Water Commission (CWC). 

According to performance audit report, the Benefit-Cost Ratio (BCR) of the project was inflated. 

Even with the understated project cost of Rs 81,911.01 crore, BCR works out to 0.75. 

Considering the latest likely project cost (Rs 1,47,427.41 crore), the BCR works out to 0.52. 

"This means that every rupee spent on the project would yield only 52 paise. It clearly indicates that the project was, ab-initio, economically unviable," reads the report presented in Telangana Assembly on Thursday. 

The report also highlighted improper planning and undue haste in award of works. 

The report mentioned that the government did not accord administrative approval to the project as a whole and instead it issued separate approvals, as many as 73 administrative approvals aggregating to Rs 1,10,248.48 crore. 

There are no orders from the government about the funding pattern of the project. Out of the total expenditure of Rs 86,788.06 crore incurred on the project (March 2022), an expenditure of Rs 55,807.86 crore (i.e., 64.3 per cent) was met from the off-budget borrowings (OBBs). 

"The absence of a comprehensive plan duly spelling out the sources of funds for a project of this scale, which will have a long term impact on the finances of the state, is an indication of improper planning," it said. 

It also mentioned that the peak energy demand, when all the pumps are operated, is more than the average daily energy availed in the entire state (2021-22). 

It observed that providing power to lift irrigation schemes will pose a challenge to the state. 

The CAG report states that the department showed undue haste in award of works. Seventeen works costing Rs 25,049.99 crore were awarded even before approval of the Detailed Project Report (DPR). 

"In the DPR, water for the project was proposed to be lifted from River Godavari at the rate of 2 TMC per day. The pumping capacity was later increased to 3 TMC per day involving an additional cost of Rs 28,151 crore," it said. 

It also noted that due to re-engineering of the Pranahita-Chevella Sujala Sravanthi (PCSS) Project and changes made in the project works, certain portions of works already executed had become redundant, resulting in a loss of Rs 767.78 crore. 

Against targeted new CA (command area) of 18.26 lakh acres, the works entrusted so far (March 2022) included development of distributary network for only 14.83 lakh acres. 

The actual command area created so far was 40,888 acres only (March 2022), says the report. 

Of the 56 project works, only 12 works were completed, 40 works were ongoing while 4 works have not even commenced, as of March 2022. 

Lands required for distributary network, etc., are yet to be fully identified. 

The CAG observed that the possibility of undue benefit of at least Rs 2,684.73 crore to the contractors for supply and commissioning of pumps, motors etc., cannot be ruled out. 

Further, post tender inclusion of price adjustment clause resulted in avoidable payment of Rs 1,342.48 crore.