HYDERABAD: Under heavy fire for willfully causing losses of thousands of crores of rupees to the state exchequer while awarding a 30-year contract for integrated toll collection and maintenance of the Nehru Outer Ring Road, the state government on Wednesday said it was ready to face any probe and had followed all procedures.
Rushing to defend the decision and claiming that no wrong was done, Special Chief Secretary of the Municipal Administration & Urban Development Department Arvind Kumar claimed that everything from the time of calling for international tenders to the final award of contract to the Maharashtra-based IRB Infrastructure Developers Limited for Rs 7,380 crore was done by the book.
Speaking at a press conference, Arvind Kumar, however, refused to divulge the base price fixed for the contract, saying “This cannot be revealed. It was not revealed even to bidders as they would have then placed their bids just around the base price,” he said after the bids were finalised and the contract was awarded.
One of the major questions raised by BJP MLA M. Raghunandan Rao on Tuesday and Congress PCC president a day prior was about the manner of proceeding with the contracting process, in gross violation of norms, among others, not setting up a base price, and/or the secrecy surrounding the base price. Both the Congress MP and the BJP MLA alleged massive corruption and backdoor deals between IRB and the BRS government.
“As per generally accepted practice for computation of Initial Estimated Concession Value (IECV) for toll-operate-transfer (TOT) projects, the concession fee is compounded based on net present value of toll revenue, minus operating and maintenance costs, taxes to be paid along with interest on loans taken by the concessionaire,” he said.
He said the Rs 7,380 crore bid was based on a “future discounted value,” adding that if the same amount was seen in real terms at end of 30-year contract, it would be around Rs 1,30,000 crore.
“It is not correct to divide the accepted bid value by number of years and claims cannot be made that a loss generating deal has been agreed to,” he argued.
He said the tender process was based on the state government’s ORR Toll Policy of 2012, which was in line with the National Highway Authority’s Toll Fee Rules of 2008. He further suggested that the formula to calculate the base price was based on the NHAI formula.
“This was an entirely fair and transparent process,” Arvind Kumar said, adding “this is the second largest monetisation deal. There will be a review every 10 years. If the concessionaire's earnings are more than expected, the concession period would be reduced.”
The government will continue to own the infrastructure, and the company will collect tolls, which will follow a formula for periodic increases, and maintain the road. It will have no other rights on any land outside of the road, he added.
Incidentally, while the IRB will maintain and collect the toll gates for the next 30 years, it would not maintain the greenery along the 158-kilometre-long Nehru Ring Road.
“The HMDA has reserved for maintenance of greenery on ORR for itself, as we were not certain if the concessionaire would do a proper job. The HMDA will additionally spend Rs 40 crore each year for greenery maintenance,” Arvind Kumar replied to a question.
That would put an additional burden of at least '1,200 crore on HMDA to maintain greenery on a project they would not earn any more daily or annual revenues or profits.
When asked why the winning bidder, IRB Infra Developers, who had in 2018 taken up the challenge to maintain the ORR for around nine months, promising to raise a daily revenue of '88 lakh, but failed to deliver and defaulted on payments, after which the authorities had to reportedly issue notices, Kumar said this issue will not arise now as the total bid amount will have to be paid in advance. Pressed for reasons claimed by the company on why it defaulted in the past, Arvind Kumar said he will find out and inform later.
On a request by several major players to extend the bid closure by 45 days so they could participate, including Maple, Athanng, Cube Highways, L&T, Adani Road Transport, and others, because March 31 was a financial year-ending date, Arvind Kumar said an “oral” request was received on March 31, last day for bid submissions, and was not considered.
On Adani Road Transport, Kumar said, “it was a non-serious bid. They knew exactly what to do.”
The Opposition has raised several issues and made allegations, including how the top three bidders (H1, H2 and H3), the Virendra D. Mhaiskar-led IRB Infra Developers (who bid at Rs 7,272 crore and were awarded the contract), Dinesh Chand Agarwal Infra (Rs 7,007 crore) and Gawar Cont Ltd (Rs 6,767 crore) - the second and third purchased the bid application only 48 hours before the deadline. Some of the opposition leaders are also alleging that the top three bidders' firms belong to the same management.
The other allegations being alleged include how the tenders were opened on April 11 and results declared on April 27, and the winning bid was increased from Rs 7,272 crore to Rs 7,380 crore. Incidentally, the opposition also felt that a reverse auction or a Swiss challenge method bid should have been allowed to ensure someone who can openly bid and give the government more money should be allowed.
Alleging a scam of over Rs 1,00,000 crore, the BJP has demanded that Central agencies like the CBI or ED should step in to investigate the entire process of the ORR tender (ID 365465) and reconsider the entire decision. Responding to the charges levelled by the BJP over irregularities and allegations of massive corruption in the contract deals, Arvind Kumar said that he was open to any inquiry.
