Pinarayi team had brokered SNC deal: CAG

Thiruvananthapuram: The High Court might have exonerated Pinarayi Vijayan by essentially stating that the SNC-Lavalin deal was a bureaucratic conspiracy hatched behind the back of the then power minister Pinarayi Vijayan. However, the CAG report tabled in the Assembly on March 31, 2005, begs to differ.

The report noted that it was after discussions with a delegation headed by the power minister in October 1996 that a contract for technical services signed seven months before was converted into a contract for the supply of goods and services for the renovation of Pallivasal, Sengulam and Panniar power stations. What was originally a contract for '17.89 crore in February 1996 swelled to '169 crore by October of the same year, barely four months after Pinarayi assumed charge as power minister. 

What the CAG report found most curious was that the “ministerial delegation” that conducted the deliberations with SNC did not even consider the fact that SNC was only a consultant intermediary and not the original equipment manufacturer. (The supply of goods was later made under the contracts by Alstom, Canada, at a considerably higher cost).

When consultants were thus converted into suppliers and supervisors, it was only logical that the consultancy part was inherent in the news terms. But the delegation headed by Pinarayi Vijayan allowed SNC to retain the earlier consultancy charges. Therefore, while the cost of supply of equipments and the related services was fixed at Rs Rs 149.15 crore, the consultancy charges of '17.89 crore that had by then become superfluous were added to the ‘supply and service’ cost, pushing the total cost to Rs 169 crore.

Here are four major reasons why CAG noted that the contract was signed in haste: One, the renovation of the Pallivasal Power Station was taken up disregarding the opinion of the Central Electricity Authority not to replace the generators; two, Sengulam and Panniar power stations required enhancement in capacity but KSEB considered their renovation; three, no action was taken by the Board to ensure the reasonableness of the prices quoted by SNC; and four, the full Board was unaware of the necessity for renovation, and the signing of both the agreements.

After all the trouble, the expenditure of Rs 374.50 crore that was eventually incurred for renovation did not yield commensurate gains.