KLIS: Re-engineering Quadrupled Project Cost, Says CAG

Hyderabad: The much-touted re-engineering of the Pranahita-Chevella project into Pranahita and Kaleshwaram by former chief minister K. Chandrashekar Rao might help increasing the command area (extent of irrigated agricultural land) by 50 per cent, but the project cost shot up by 400 per cent, from Rs 38,000 crore to Rs 1.5 lakh crore, as per currently available information and this amount will further go up to complete the pending works.

The Comptroller and Auditor General (CAG) probe into the Kaleshwaram Lift Irrigation Scheme (KLIS) established beyond doubt that substantial amounts of the increased project cost were pocketed by the contractors, more particularly Megha Engineering and Infrastructure Limited, giving credence to Congress and Bharatiya Janata Party’s accusations of nexus between contractors and the BRS top brass.

“Audit analysis revealed that the re-engineered Kaleshwaram project was economically unviable and ab-initio,” said the CAG in its draft performance report submitted to the state government two years ago. 

While the previous government projected a 1.51 benefit-cost ratio (BCR), CAG revealed that in reality, it would be less than 0.51.

The BRS government cooked up the BCR to obtain statutory clearances, as well as loans from financial institutions. For instance, the government projected to earn Rs 3,805 crore every year from the sale of water to industries and to realise it, the Hyderabad Metro Water Supply and Sewerage Board had to increase the present industrial tariff by a whopping 19 times. 

It showed revenue of Rs 1,750 crore every year from pisciculture, by growing fish in 3.5 lakh hectares spread area in 20 reservoirs, but in reality, the spread area will not be more than 30,823 hectares and revenue just Rs 154 crore. 

According to CAG, the government under-projected the annual costs and overstated the value of annual benefits. The government projected an annual energy requirement of 13,558 million units for lifting 180 TMC ft of water and brazenly, the cost of power was worked out at Rs 3 per unit, against the actual cost of Rs 6.4, at which the discoms have been supplying to lift irrigation schemes in the state. 

“As a result, the projected energy cost is Rs 4,148 crore against the actual cost of Rs 9,400 crore,” the CAG pointed out. 

Similarly, the interest burden was pegged at Rs 8,191 crore per annum, which is 10 per cent of the project cost of Rs 81,000 crore, but with the cost escalating to Rs 1.50 lakh crore, the interest burden will jump to Rs 15,000 crore, the CAG stated.

The CAG also observed that the BRS government went ahead with re-engineering without exploring alternative ways to make the best use of the old B.R. Ambedkar Pranahita-Chevella Sujala Sravanti (PCSS) launched by Dr Y.S. Rajashekar Reddy-led government in the undivided state. The government also exhibited undue haste in preparing estimates, which the agencies concerned will arrive at after conducting soil and other mandatory tests. 

For the Medigadda barrage that recently sank, the consultant was given just four months to prepare detailed estimates, with experts saying soil tests alone would take more than a year.

The previous government claimed to have re-engineered the PCSS because of shortfalls in it and came up with Kaleshwaram to increase the command area and defended shifting of the storage point from Tummidihetti to Medigadda, given better availability of water. It also showed objection of Maharashtra for submergence of its 5,247 acres if the full reservoir level (FRL) at Tummidihetti was maintained at 152 feet as one of the reasons for re-engineering. But all the submergence it could bring down in Maharastra after re-engineering is just 511 acres. 

Further, the BRS government defended that water availability at Medigadda would be 284 TMC ft, out of which 195 TMC ft would be utilised under KLIS. The CAG, however, said the government would have ascertained the true availability of water under the old scheme instead of rushing with re-engineering. The old scheme would have catered to 16.4 lakh acres and the new one 24.96 lakh acres, but the project cost increased by more than Rs 1.2 lakh crore, it stated.

The CAG also referred to a CWC report of March 2015, in which it was clearly stated that 192 TMC ft or more was available for 65 per cent years in the old scheme and going ahead with it would have saved capital cost of Rs 1.2 lakh crore and recurring cost of Rs 2,000 crore every year.

With the sinking of Medigadda proving beyond doubt that soil condition under the three barrages and their hasty construction may put the entire re-engineered KLIS at risk raising serious concerns over the utility of Rs 1.5 lakh cr spent so far.