Andhra Pradesh Cabinet which met in Amaravati on Monday till late evening, had granted excess money to all the contractors of the irrigation projects. The State which is facing financial crisis on one side and is ahead of all States and the country in growth rate, had granted the additional cash benefit to the contractors. The decision was taken even against the recommendations of the finance department which raised objections to the proposal mooted by the water resources department.
The best offer given, among others, is the change in the payment cycle to the Polavaram contractor from the existing 30 days to 15 days. The contractor can now submit his bills for every 15 days and get the payment instead of waiting for 30 days. The government had also created a corpus fund for the Polavaram project with Rs 20 crore to help the contractor procure required diesel at the project site on demand. There were some incidents in the past where the contractor could not supply diesel for the vehicles and engines to do the earth work in Polavaram project, which finally led to delay in the works. Now, with the corpus fund, the contractor can draw the money in advance and meet the diesel requirements without spending from his pocket. The contractor can submit the bills later as the government spends first.
The government had enhanced the project costs for all the irrigation projects started in April 2013 on the ground that the cost of inputs and material has increased and the contractor required a handholding to complete the projects. The enhancement is also justified by the government citing the change of designs for some of the projects.
“It is natural that contractors get benefits in some works and losses in some. It is a normal thing and there is no need for the government to favour the contractors for any loss in any contract,” said the finance department. However, bulldozing this argument, the Cabinet had favoured enhancement of the project cost and early payment.
The excess amount would be paid to the contractor if the works were stopped due to law and order problem in the State, if the earth work is more than the estimation and if the designs are changed.
The Cabinet also increased the project cost of Purushotthapatnam lift irrigation scheme by Rs 75.82 crore to benefit the contractor, Megha Engineering and Infrastructure Limited (MEIL) group. The MEIL had agreed to take up the Purushottapatnam at Rs 1551.22 crore and had claimed that the cost was increased due to changes in the designs. Now, the Cabinet had cleared the revised price of Rs 1627.04 crore.