Mumbai: CAG validates mid-day report, flays BMC over pumping stations

The latest report of the Comptroller and Auditor General CAG has validated a midday investigation on the mismanagement in construction of pumping stations in Mumbai The midday investigation lsquoContractorrsquos shoddy job on pumping stations is putting Mumbai at riskrsquo November 11 exposed the mismanagement in construction of three crucial pumping stations mdash Lovegrove Cleveland Bunder and Haji Ali mdash and had highlighted their poor planning design and constructionIt had exposed how the projects had countless anomalies and how the contractor sometimes used substandard 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 riskmiddays 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 lsquoweakrsquo and the BMCrsquos internal controlling mechanisms lsquoflawedrsquo ldquoThe delays were erroneously caused in the project and only 276 of the project was implemented The revised cost now stands at Rs 3885 crore which is nearly Rs 2708 crore more than the original cost of Rs 1764 cr The delay has ensured that the measures have failed to meet the flood risks in Mumbairdquo the report saidStorm in a tea cup The Lovegrove pumping station in Worli File PicThe CAG report has said Mumbai will continue to face flood risks until the projects are implemented on time and asper 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 stationsThe 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 lsquoirregular diversion of fundsrsquo lsquoirregular payment of transportation chargesrsquo lsquononrenewal of bank guaranteesrsquo and lsquononrecovery of mobilisation advancesrsquo among many other irregularities noted in the construction of pumping stationsThe midday investigation had also highlighted irregularities in renewal of bank guarantees and nonrecovery of mobilisation advances as two of the many irregularities in the project The consortium mdash Ms UnityMampPWPK mdash 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 Ms 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 midday report had saidThe midday investigation had also shown how the consortium drew inconsistent bills on the corporation manipulated progress reports and site diaries mdash which underscore the lack of safety measures at the site leading to several landslides mdash and deployed inadequate manpower and material for nearly three years since the projects had commencedmidday reportBank guaranteesThe 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 ldquoFor 16 months you did not submit BGs which shows you are not serious in completing the workrdquo reads a BMC internal audit note that took serious note of these anomaliesMobilisation advancesThe messups 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 Ms MWH even before the work on site started The first running account bill in the Lovegrove project mdash of Rs 16775160 mdash was held back by BMC because there were serious questions surrounding the contractorrsquos claims But it was later passed on December 26 2012 without any site measurement sheets mdash documents detailing how much work has been done mdash to substantiate expense claimsLack of planningOver 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 Ms MWH The contractorrsquos 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 stationsCAG reportBank guaranteesBank guarantees are taken from the contractors as a security which in the event of default by the contractors is encashed by the BMCrsquos Storm Water Drains Department to recover the losses Scrutiny of the bank guarantee register revealed that 78 bank guarantees worth Rs 5430 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 Nonrenewal of bank guarantees in time indicated weak control mechanism in the Corporation to safeguard its financial interestsMobilisation advancesAs 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 896 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 1260 crore However instead of effecting recovery from the contractor MCGM treated the liability of the contractor Rs 1260 crore as fresh MA from November 2011 onwards Despite noncommencement of work MCGM did not recover MA amounting to Rs 1542 crore from the contractor principal amount Rs 1260 crore plus interest Rs 282 crore resulting in blocking of funds and irregular financial benefit to the contractorLack of planningPayment of Rs 5730 lakh made to the contractor for surveyinvestigationpiling work was rendered unfruitful MCGM stated June 2013 that the pile foundation would be utilised for construction of retaining wallstructure 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