Cost of BMC’s mega pipe project doubles in a year…….Nauzer K Bharucha
MUMBAI: The astronomical increase in the cost of a key underground water tunnel to the city in the span of a year has raised questions about the transparency and working of the BMC.
In 2008, the cost of the 15.1-km-long tunnel from Gundovli near Bhiwandi to Bhandup, as part of the Middle Vaitarna Project to bring 455 million litres a day of water to the city, was estimated at Rs 1,122 crore. In October 2009, the civic standing committee comprising corporators of all parties, approved the project at almost double the cost—Rs 2,019 crore.
Civic sources have dubbed it “brazen profligacy” given that the BMC is facing a huge financial crunch. What has also raised eyebrows is the fact that there were only two bidders for such a mega project.
In 2008, the BMC’s consultant, Mott MacDonald Consortium, submitted a detailed report on a water supply project for Mumbai and estimated the cost of constructing a new 15.1-km tunnel between Gundovli (near Bhiwandi) and Bhandup at Rs 1,122 crore.
A year later, in October 2009, the civic standing committee comprising corporators from both ruling and opposition parties approved the project at almost double the cost (Rs 2,019 crore).
The BMC administration justified the huge cost escalation, stating that prices of steel, cement and electricity had shot up. But, at a time when the BMC is showing signs of facing a financial crunch, a section of civic official themselves say this kind of “brazen profligacy” could soon sink India’s largest civic administration.
The tunnel project, which was broken up into two parts, was awarded to the Unity-IVRCL joint venture and Soma Enterprises Ltd. There were just two bidders (Unity and Soma) who were competing against each other for this huge project.
More than a dozen leading engineering companies, who initially showed an interest and purchased the tender documents, did not bid for the project. “The pre-qualification tender conditions were such that all of them found themselves disqualified from bidding,” said the senior official of an engineering giant, which found itself out of the race. But senior BMC officials, involved with this project, blamed this criticism on “rivalry between competing firms”.
“Everything was done according to procedures,” one of them said. Asked how only two firms bid for such a large project, he added: “It’s strange why they did not participate. You must ask them.”
BJP corporator and standing committee member Ashish Shelar, however, was less categorical. “It stinks of political corruption at the highest level.” But he also said all parties in the standing committee approved it because otherwise they would have been blamed for stalling an important water works project for the city.
Tracking the project
Investigations done by this newspaper, based on official documents, show how the initial cost estimate kept on going higher and higher. A BMC note that was placed before the standing committee and accessed by TOI pegged the consultant’s cost estimate at Rs 1,185 crore. The civic administration claimed that it had sought funding from the Centre for this project under the JNNURM but was turned down.
The consultant, Mott MacDonald, then revised its estimate to Rs 1,382 crore (Rs 665 crore for section A of the tunnel and Rs 717 crore for section B). Both Unity-IVRCL and Soma Enterprises were found to be qualified for the project. For Section A, Soma was the lowest bidder at Rs 998 crore and Unity-IVRCL was the lowest bidder for Section B at Rs 1,057 crore. These rates were 47% to 49% more than the consultant’s revised estimate.
The consultant then went on to list a slew of reasons why the cost had shot up: Euro rates were up, steel and electricity prices went up and increasing the depth of the tunnel to 120 metres would mean more expenditure for concreting it.
Based on this input, the BMC once again hiked its estimate to Rs 1,523 crore (Rs 733 crore for Section A and Rs 790 crore for Section B). This estimate was further pushed up to Rs 1,771 crore (Rs 852 crore for Section A and Rs 919 crore for Section B).
After this, Soma Enterprises quoted its final price of Rs 978 crore for Section A and Unity-IVRCL quoted Rs 1,041 crore for Section B, which worked out to a total project cost of Rs 2,019 crore. The BMC thus managed to show that the project was awarded at just 12% to 14% more than its estimated cost of Rs 1,771 crore.
The Irony
Ironically, Mott MacDonald had pointed out in its report that laying pipelines instead of tunnel would be much more expensive and would cost Rs 1,867 crore as compared to Rs 1,122 crore for the 15.1-km tunnel. “Therefore, it was decided that the tunnel would be from Gundovli to the Bhandup Water Complex,” said the report.
“The pre-qualification tender condition was designed in such a way that the bidder could have an MoU with a tunnelling agency who had done tunnelling in an Indian metro city only with a dense population. Since there was just one agency which has done this sort of work (for the Delhi Metro), with which the winning bidder had tied up, all the other experienced companies could not even submit their bids,” said a representative of a big firm which lost out.
Some of the big engineering companies which attended the pre-bid meeting but later backed out were Essar Construction, L&T, Gammon, Patel Engineering, HCC, Simplex, Valecha Engineering, Accurate Electrical Works, Envision ECC, CMC, Rithwik Projects, Continental Construction and SEW Infrastructure.
Asked as to why they did not protest or challenge it in court, a senior official representing one these companies said, “We have a lot at stake in the BMC and do not want to jeoparidise our chances for future civic projects.”
S S Tinaikar, who was municipal commissioner between 1986 and 1990, described this abnormal cost escalation as a “common practice” in the BMC. “During my tenure I had issued a circular that cost escalation should not be beyond a point. I had appointed a consultant to probe whether such increase of rates was justified and he concluded that it was unjustified,” he said.