CAG’s report tabled in Assembly on Wednesday, less than a month after mid-day investigation, has called implementation of pumping stations ‘weak’ and the BMC’s internal controlling mechanisms ‘flawed’
The Lovegrove pumping station
The latest report of the Comptroller and Auditor General (CAG) has validated a mid-day investigation on the mismanagement in construction of pumping stations in Mumbai. The mid-day investigation (‘Contractor’s shoddy job on pumping stations is putting Mumbai at risk’, November 11), exposed the mismanagement in construction of three crucial pumping stations — Lovegrove, Cleveland Bunder and Haji Ali — and had highlighted their poor planning, design and construction.
It had exposed how the projects had countless anomalies and how the contractor sometimes used sub-standard material, often sourced from unlisted suppliers, and violated many tender conditions, thereby not only causing losses to the civic exchequer, but also putting lives at risk.
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mid-day's report on November 11
Now, the CAG report on the BRIMSTOWAD project, tabled in the Assembly on Wednesday, has substantiated the mess in the construction of the three storm water pump stations. In the report, the auditor has blasted the municipal corporation, calling the implementation of pumping stations ‘weak’ and the BMC’s internal controlling mechanisms ‘flawed’. “The delays were erroneously caused in the project, and only 27.6% of the project was implemented. The revised cost now stands at Rs 3,885 crore which is nearly Rs 2,708 crore more than the original cost of Rs 1,764 cr. The delay has ensured that the measures have failed to meet the flood risks in Mumbai,” the report said.
Storm in a tea cup: The Lovegrove pumping station in Worli. File Pic
The CAG report has said Mumbai will continue to face flood risks until the projects are implemented on time and as
per the mandatory standards prescribed in the contract. The CAG flayed the BMC for mismanagement and put the blame squarely on it for all the delays and the poor planning of the pump stations.
The CAG also pointed out anomalies in rehabilitation of old sewer lines, where cost overrun was to the tune of Rs 28 crore in as many as seven works. The CAG said there was ‘irregular diversion of funds’, ‘irregular payment of transportation charges’, ‘non-renewal of bank guarantees’ and ‘non-recovery of mobilisation advances’ among many other irregularities noted in the construction of pumping stations.
The mid-day investigation had also highlighted irregularities in renewal of bank guarantees and non-recovery of mobilisation advances as two of the many irregularities in the project. The consortium — M/s Unity/M&P/WPK — constructing the pumping stations held back bank guarantees or BGs (which work as safety deposits and can be seized to recover losses in case the contractor fails to perform) for 16 months. Meanwhile, payments were released by BMC to consultants M/s MWH even before the work on the site started. When the consortium did submit BGs, they were from a bank not notified in the contract condition, the mid-day report had said.
The mid-day investigation had also shown how the consortium drew inconsistent bills on the corporation, manipulated progress reports and site diaries — which underscore the lack of safety measures at the, site leading to several landslides — and deployed inadequate manpower and material for nearly three years since the projects had commenced.
mid-day report
Bank guarantees
The consortium held back bank guarantees or BGs (which work as safety deposits and can be seized to recover losses in case the contractor fails to perform) for 16 months. When the consortium did submit BGs, they were from a bank not notified in the contract condition. “For 16 months you did not submit BGs, which shows you are not serious in completing the work,” reads a BMC internal audit note that took serious note of these anomalies.
Mobilisation advances
The mess-ups did not deter the BMC from approving mobilisation advances to the consortium. It even cleared bills that showed inconsistencies. Meanwhile, payments were released by BMC to consultants M/s MWH even before the work on site started. The first running account bill in the Lovegrove project — of Rs 1,67,75,160 — was held back by BMC because there were serious questions surrounding the contractor’s claims. But it was later passed, on December 26, 2012, without any site measurement sheets — documents detailing how much work has been done — to substantiate expense claims.
Lack of planning
Over 80 designs, drawings and performance charts were not submitted by contractor Unity, and many of those submitted were of poor quality, having a cascading effect on the quality of construction. The consortium also continued sourcing material from vendors with no proper credentials or background; some did not exist on the list approved by the corporation. This made quality control nearly impossible for BMC and consultant of the project M/s MWH. The contractor’s disregard for safety measures was such that at various stages, lives of labour and citizens in the vicinity of the project were at risk. Over the course of work since 2012, the project witnessed two major landslides, causing loss of property. At other times, there was flooding inside the pump stations.
CAG report
Bank guarantees
Bank guarantees are taken from the contractors as a security which, in the event of default by the contractors, is encashed by the BMC’s Storm Water Drains Department to recover the losses. Scrutiny of the bank guarantee register revealed that 78 bank guarantees worth Rs 54.30 crore were not renewed by MCGM even after their expiry ranging from two to 65 months. MCGM stated (July 2013) that letters have been issued to the contractors for renewal of bank guarantees. Non-renewal of bank guarantees in time indicated weak control mechanism in the Corporation to safeguard its financial interests.
Mobilisation advances
As per General Conditions of Contract No. 84, recovery of mobilisation advance (MA) is required to be made from the running account bills of the contractors in suitable percentage based on the progress of work done and is to be fully recovered by the time 80 per cent work is completed. The work of construction of storm water pumping station at Lovegrove was awarded in November 2007 and a MA of Rs 8.96 crore was granted to the contractor. Audit scrutiny revealed that the liability of the contractor towards MA along with accumulated interest till November 2011 was Rs 12.60 crore. However, instead of effecting recovery from the contractor, MCGM treated the liability of the contractor (Rs 12.60 crore) as fresh MA from November 2011 onwards. Despite non-commencement of work, MCGM did not recover MA amounting to Rs 15.42 crore from the contractor (principal amount: Rs 12.60 crore plus interest: Rs 2.82 crore), resulting in blocking of funds and irregular financial benefit to the contractor.
Lack of planning
Payment of Rs 57.30 lakh made to the contractor for survey/investigation/piling work was rendered unfruitful. MCGM stated (June 2013) that the pile foundation would be utilised for construction of retaining wall/structure in future, whenever possible. Besides, there was lack of planning and coordination between the Departments of MCGM (Storm Water Drain Department and Roads and Bridges Department) in the implementation of this project. The implementation of Brihanmumbai Storm Water Drain project by MCGM was beset with delays and cost escalation. The project management and implementation was weak and there were lapses in internal controls.
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