Setback for Jagan Reddy govt, Andhra High Court stays re-tendering of Polavaram project

Polavaram multi-purpose irrigation project is centrally-funded and the Centre and Polavaram Project Authority (PPA) advised Jagan not to cancel the contract given to NECL. The Centre had warned that it would lead to cost escalation and further delay the project.

Jal Shakti Minister Gajendra Singh Shekhawat and PPA CEO R K Jain had written letters to Reddy not to cancel the tender. “Such a step will result in unforeseen consequences and will plunge the project into uncertainty,” Shekhawat wrote.

Following the government’s decision on July 29, the Andhra Pradesh Power Generation Corporation served a pre-closure notice on NECL on August 14. NECL challenged the order in the High Court.

Appearing for NECL, former Advocate General Dammalapati Srinivas argued that the state government did not give any valid reason though the project was on schedule and meeting all deadlines. Advocate General Sriram Subramanyam stated that the government took the decision to invite fresh tenders so that more companies can bid and this may bring down costs.

The Polavaram dam project was originally awarded to Transtroy India Ltd, owned by former TDP MP Rayapati Sambasiva Rao. However, former CM Chandrababu Naidu was unhappy with the slow pace of work and sought the Centre’s permission to replace the firm.

When new bids were invited, bidders quoted an estimate of Rs 1,483 crore, about Rs 500 crore more than the contract with Transtroy. However, NECL offered to take up the works at the earlier price. On January 30 last year, Union Minister Nitin Gadkari agreed to handover the project to NECL, which was executing it for Rs 3,400 crore as per schedule.

Work at the Polavaram site has been halted due to seasonal flood in Godavari river and may begin in the first week of November.