CAG slams MSRDC for lack of transparency

The CAG report for the year 2004-05 has criticised the Maharashtra State Road Development Corporation for what it called "lack of transparency" in awarding contracts during construction of the Mumbai-Pune expressway, stating that work was undertaken without adequate planning and required control mechanisms.

In its report for 2004-05, which was tabled in the legislature today, the CAG strongly criticised construction of the 86-km stretch of highway, saying "the work of Mumbai-Pune expressway was undertaken and executed without adequate planning and and the required control mechanisms and contract management was deficient at all levels."

"The procedure adopted for award of construction works by restricting one package to one party deprived the company of the benefit of the best price through competitive bids. There was a lack of transparency in the award of consultancy contracts," the report said.

In a detailed analysis of the project, the CAG has hit out at almost all aspects, including repayment of loans raised to finance the project. The report also criticised the fact that the reserve price fixed for awarding toll collection cum maintenance contract was very low and was communicated to the bidders in violation of normal practice.

Recommending preparation of a detailed project report alongwith sensitivity analysis to for ascertain feasibility, the CAG said a firm cash flow plan should be drawn up and the practice of restricting one package to one bidder should be done away with.

"No detailed project report was prepared. Sensitivity analysis, an exercise essential to ascertain project feasibility was not carried out at the start of execution of project," the report said.

"Although measurement is a critical area, the company failed to get this item of work checked by its own staff. Several deficiencies were found in execution of works and in certification/measurement work entrusted to private agencies," it said.

The company also incurred extra expenditure of Rs 54.06 crore due to irregular award of construction works and irregular allotment of consultancy contracts, the report added.

As regards toll collection the CAG came across several deficiencies in the contract which were "highly detrimental" to the company's financial interests. Keeping this in mind, the report recommends a reliable mechanism to ensure correct recording of measurements of work done by contractors adding "special care needs to be taken in drawing up agreements for collection contracts for infrastructure projects."

The report also focussed on advertising revenues from hoardings on the expressway, saying the total revenue earned from advertisements during 2002-05 was Rs 4.48 lakh as against a projected revenue of Rs 10.19 crore, but pointed out that there was great potential for revenue from this source.