Mumbai: Public Accounts Committee alleges Rs 200-crore scam in water meters

Updated: May 07, 2018, 15:57 IST | Laxman Singh

Report, which has been tabled in Assembly, may force BMC to recover loss to the exchequer from contractors and order a probe against 13 engineers

Ironically, the automatic meters were supposed to put an end to water pilferage across the city and increase revenue
Ironically, the automatic meters were supposed to put an end to water pilferage across the city and increase revenue

After the multi-crore road repair racket and desilting scam, the country's richest civic body has been hit by another scam. A recent report from the Public Accounts Committee (PAC) has pointed out serious "financial irregularities" in a decade-old water meter project by the BMC. The committee concluded that the Automatic Meter Reading (AMR) project has failed completely and led to wastage of over Rs 200 crore of taxpayers' money.

Ironically, the Rs 316-crore AMR project was supposed to put an end to water pilferage and increase revenue through legal water connections. Instead, the PAC has labelled it a "complete waste of funds", and has hauled the civic body for alleged large-scale mismanagement and negligence.


PAC is a state legislature body headed by Gopaldas Agarwal, Congress MLA from Gondia. Speaking to mid-day, Agarwal said, "This project is a scam. BMC officials were more interested in the purchase of meters, rather than implementation of the project. "After the committee's detailed scrutiny, it was found that the project was a complete waste of funds. Considering the seriousness of the issue, the PAC has recommended a detailed inquiry under the additional chief secretary (Finance)."

The PAC findings are based on the Comptroller and Auditor General CAG's audit report in 2012-2013, after which the committee scrutinised the whole project last year.

The meters were supposed to regulate water supply and usage, especially in slums. Representation Pic
The meters were supposed to regulate water supply and usage, especially in slums. Representation Pic

So much went wrong
In 2009, the BMC kicked off the first-of-its-kind project to install automatic water meters across the city. The civic body had purchased 1.35 lakh AMR meters of four different gauges for the city and its suburbs. According to the PAC report of December 2017, which was tabled in the Assembly during the winter session at Nagpur, the terms of the tender were more in 'favour' of contractors - they were paid 70% of the contract cost immediately after purchase, and the remaining 30% was paid after installation.

However, as many as 33,977 AMRs were never installed and continue to gather dust in a municipal godown, resulting in a loss of R52 crore. The PAC pointed out: "There is hardly any possibility of use of these meters, as they have completed their life cycles."

What's more, the BMC had paid Rs 267 crore to three contractors - Pratibha Industries for the city, Axelia-Unity JV for western suburbs, and Unity-Axelia JV for the eastern suburbs - who were supposed to install and then maintain the meters and take readings for the next five years. But the contractors stopped taking readings midway, causing further losses to the Corporation.

One of the biggest reasons to introduce the AMR project was to ensure metering for all establishments, including slums. "Initially, the BMC had planned to install them in slums. But they stopped after the meters were damaged, stolen and broken," stated the PAC report.

BMC has now proposed to recover Rs 205 crore from the contractors, as well as conduct a detailed inquiry of 13 civic officials from the Hydraulic Engineering (HE) department (two deputy chief engineers, three executive engineers and eight assistant engineers). Agarwal said, "It is shocking that despite such grave irregularities, the department has delayed the inquiry. Out of the 13 officials responsible for the project, seven have since retired, and one officer has been promoted. Had the department taken the CAG's notes seriously, the officials would not have had a chance to escape without any action."

"We had submitted our report before the Assembly, and the BMC was asked to submit a report on action taken in the next three months. However, nothing happened this time as well, so we will raise the issue in the Assembly again," he added.

The other side
An officer from the HE department at BMC admitted that the project had failed due to lack of proper study and planning. "It was a good project, but unfortunately, it did not work out. Metering in the city, especially in the slums, is very difficult. The purpose of introducing these meters was to get accurate and real-time readings," said the official.

Another top civic official said, "The terms of the tender were as per international standards. Across the world, 70% payment is made on purchase of equipment, and 30% is released upon installation."

The official added, "In the preliminary inquiry, all 13 officers were found guilty of negligence. Now, we have proposed a detailed inquiry against them. Also, we have recovered Rs 36 crore via bank guarantee for the project, as well as Rs 1.11 crore in fines from the contractors after they stopped taking readings."

The BMC intends to seize another Rs 40 crore in the form of deposits and bills pending across various departments. The final blow will come in the form of penalties amounting to Rs 127 crore. The official added, "We have sent letters to all civic departments to stop payment to these contractors. Following this action, one of the contractors has approached the court." The civic body also claims to have used more of the AMRs, bringing the number of unutilised meters down to 27,054 as of March 31.

Also Read: PAC Asks BMC To Recover Rs 127 Cr From Water Meter Suppliers 

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