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Auditor Report Says Telangana's Kaleshwaram Project Economically Unviable






The Comptroller and Auditor General has come out with a damning report on Telangana's Kaleshwaram  project, which says it was economically unviable from the start and details the massive cost overruns, possible undue benefits accrued to contractors and the poor planning involved.

The cost of the Kaleshwaram Project, touted as the world's largest multi-stage lift irrigation project is now likely to exceed ₹ 1.47 lakh crore, as against ₹ 81,911 crore projected to the Central Water Commission (CWC), a new report by the Comptroller and Auditor General (CAG) said on Thursday.

The report of the CAG on the performance audit of the flagship project of the previous BRS government was tabled in the legislative assembly.

The CAG also found that the project was economically unviable from the beginning.

The Kaleshwaram project has been mired in controversy, especially after some piers of the Medigadda barrage "sank" last year.

The National Dam Safety Authority (NDSA) found in November that the Medigadda barrage is severely compromised, rendering it useless unless fully renovated.

The damage to the barrage is believed to be one of the major reasons for the defeat of BRS in the recent assembly polls.

The Kaleshwaram Project is an off-shoot of the Dr B R Ambedkar Pranahitha-Chevella Sujala Sravanthi Lift Irrigation Scheme (PCSS Project) formulated by the erstwhile undivided state of Andhra Pradesh.

The executive summary of the CAG report said the Government of Telangana has not accorded administrative approval for the project as a whole and instead it has issued separate approvals -- as many as 73 administrative approvals aggregating to ₹ 1,10,248.48 crore, and that there are no orders from the government about the funding pattern for the project.

Out of the total expenditure of ₹ 86,788.06 crore incurred on the project (March 2022), an expenditure of ₹ 55,807.86 crore (64.3 per cent) was met from the off-budget borrowings (OBBs) raised by KIPCL (Kaleshwaram Irrigation Project Corporation Limited), it said.

"The possibility of undue benefit of at least ₹ 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 ₹ 1,342.48 crore," it added.

The Benefit-Cost Ratio (BCR) of the project was inflated; even with the understated project cost of ₹ 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, the report further revealed.

"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," it said.


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