The State Cabinet at its meeting held on Wednesday ratified the pre-closure of the Polavaram Hydro Electric Project (PHEP) contract that was awarded to Navayuga Engineering Company Limited (NECL) for nearly ₹3,217 crore and gave its nod for reverse tendering, a process which has already been set in motion in spite of objections by the Polavaram Project Authority (PPA).
The Cabinet also decided to recover the ₹780-crore mobilisation advance paid to NECL.
High Court order
The Cabinet decision came just about two weeks after the High Court directed the government to suspend the order issued by AP-Genco for pre-closing / terminating the contract given to NECL, which argued that it had time till November 2021 for completing the 960-MW (12X80 MW) project.
The court had also barred the government from floating reverse tenders and it insisted that the opportunity to remedy any defects be given to the petitioner (NECL) and the action taken by Genco was neither in accordance with the terms of the contract nor settled principles of law.
In his letter dated August 16 to Special Chief Secretary (Water Resources) Aditya Nath Das, PPA CEO R.K. Jain said there was neither enough ground nor necessity for pre-closure of tenders and re-tendering and advised the State to abandon the idea in the best interests of the project or keep it in abeyance till the Central government took a considered view of the matter.
It may be noted that the Polavaram irrigation project, of which the power plant is a part, was dogged by controversies with the YSR Congress government alleging that large-scale corruption took place in its implementation and costs were jacked up to benefit some contractors close to the Telugu Desam Party. The government has set up a Cabinet sub-committee to review all major policies, projects and administrative sanctions after bifurcation and a separate eight-member expert panel for the same purpose with the stated objective of “saving money to the exchequer through reverse tendering” wherever there is scope for it.