PUC smells a rat in mining contract
The Public Undertakings Committee on Wednesday ordered the mining wing of industries department to come up with all relevant records and explain why a fresh tender was called to award a mining contract, which led to additional expenditure of Rs 97.21 crore for the state exchequer. Chaired by Congress MLA Adala Prabhakar Reddy, the committee members in their meeting took into account the Comptro-ller and Auditor General’s remark against the extra expenditure.
Principal industries secretary Dasari Srinivasulu told the committee that he would require time to furnish explanations since he assumed charge recently. The committee postponed further examination of the CAG’s observations on Wednesday and deleted remarks against other issues after hearing out explanations offered by the respective departments. The case dates back to February 2008, when AP Mineral Development Corporation invited sealed tenders for excavation of 75 lakh metric tonnes of barytes ore and 200 lakh cubic meters of overburden over five years.
PLR Projects emerged the lowest bidder out of seven firms in the race, quoting Rs 238.40 crore. But issued the Letter of Acceptance, PLR Projects did not enter into an agreement, leading to the Corporation forfeiting the earnest money of Rs 1 crore. The Corporation later invited P. Prabhakara Reddy and Deepika, a joint-venture company that quoted the second lowest bid, to take up the work at rates quoted by PLR Projects. But with the JV firm not accepting the offer at the rates offered, the Corporation ultimately cancelled the tender and invited fresh tenders in May 2008.
Vijaya Leasing Compnay and Chenna Keshava Constructions, another JV, emerged the lowest bidder this time, quoting Rs 394.93 crore, later reduced to Rs 389.87 crore. But the CAG questioned the need to call a fresh tender, saying the JV company’s bid in the first call was higher than the existing contract rates by only 8 per cent, and well within the ceiling of 10 per cent tender premium. “There was no justification for not awarding the work to lowest 2 (the JV firm) at its quoted rates. This (fresh tender) resulted in extra expenditure of Rs 97.21 crore by the government,” the CAG report said.
Though the Mining Corporation offered a lengthy explanation to PUC, reasoning that its move did not violate rules and regulations, the committee members were not satisfied. They called for further explanation from the government, including ferreting out all “relevant records”, for the committee’s next meeting.
Post new comment