New Delhi: Despite the bonhomie between the BJP-led NDA and the YSR Congress Party headed by Andhra Pradesh Chief Minister Y.S. Jagan Mohan Reddy, the Union finance ministry has offered less than half of the revised cost required to complete the Polavaram mult-ipurpose dam project, putting a question mark on its future and leaving the state government peeved.
An angry Andhra CM shot off a letter to Prime Minister Narendra Modi last week saying that any unrealistic cost estimate would result in the project remaining incomplete.
A confrontation between the state government and Centre is expected Monday at the meeting called by the Polavaram Project Authority (PPA) to take a final call on the cost required to complete the project.
The PPA, which has officials from the state and Centre as its members, is unlikely to agree to the reduced cost of Rs 20,398 crore that the finance ministry has worked out based on 2013-14 price levels, senior state government officials told ThePrint.
The PPA, which was set up by the Centre in 2014 to execute the project, had recommended a second revision of cost estimate at Rs 47,725 crore according to the 2017-18 price level.
In an official communication to the PPA on 12 October, the finance ministry has made release of funds conditional to it (PPA) accepting the revised cost estimate of Rs 20,398 crore.
The Polavaram, a multi-purpose project across the Godavari river near Rajahmundry in Andhra Pradesh, comprises a 194 TMC reservoir for irrigation and drinking water purposes and a power plant of 960 MW capacity.
It was declared a national project in 2014, meaning that the central government will provide the funds while the state government will execute the work.
Also read: Tradition trumps Covid fear as 30,000 people gather late night for stick-fight in Andhra
Jagan writes to PM
The finance ministry’s stance has forced Andhra Pradesh Jagan to seek the PM’s intervention in the matter, saying it has led to an “imbroglio” and an “embarrassment”.
“…. By capping the expenditure for entire Polavaram Irrigation Project at Rs 20,398.61 crore at 2013-14 price level for irrigation component only is unrealistic and not in accordance with the earlier commitment of the Union government and guidelines for National Projects and also violation of AP Reorganisation Act, 2014, enacted by Parliament,” Reddy has said in his letter accessed by ThePrint.
This despite Reddy meeting Modi on 6 October to discuss various issues related to the state, including release of pending funds for the Polavaram project. Reddy’s YSR Congress Party is considered friendly towards the NDA dispensation and has supported many contentious bills moved by the Centre including the abrogation of Article 370 that granted special status to Jammu and Kashmir and the more recently, the farm bills.
Reddy has said in his letter that any further delay would not result in increasing the project cost further, which in turn will “do no good to national interests as it is a national project”.
The cost battle
A senior state government official, who did not want to be named, said the state has already incurred costs of Rs 12,520 crore on the project after 2014. Of this around Rs 8,507 crore has been reimbursed by the Centre.
In its 12 October communication, the finance ministry has allowed reimbursement of Rs 2,234 crore out of the pending Rs 4,013 crore but has made the release conditional to the PPA accepting the second revised cost estimate at the 2013-14 price level.
”This is ridiculous. The second revised cost estimate of Rs 47,725 crore was not only recommended by the PPA, which has representatives from Union Jal Shakti ministry and finance ministry but also by other central agencies including the Central Water Commission, Technical advisory Committee and Revised Cost Committee,” said the official.
Work on the Polavaram project had started in 2005. At that time the project cost was estimated at Rs 10,151 crore in line with the 2005-06 price levels.The project had missed several deadlines since then and the cost also escalated manifold. The new deadline to complete the project is December 2021.
Central government sources say that the finance ministry’s stand to cap the revised cost estimate based on 2013-14 price level is in accordance with the Union Cabinet’s decision in March 2017 when it approved the special assistance measure for Andhra Pradesh, following the state’s bifurcation in 2014. The then Telugu Desam Party (TDP) state government under CM Chandrababu Naidu had not raised any objections to the Union cabinet’s decision.
A senior official of the Union Jal Shakti ministry, who did not want to be named, said that a committee headed by joint secretary-cum-financial advisor in the ministry had scrutinised the revised estimate and sent its report to the finance ministry earlier this ministry. “The finance ministry had to take a call on the funds to be released,”the official said.
Cost escalated due to land acquisition
A second senior state government official said the bulk of the cost escalation was on account of land acquisition, rehabilitation and resettlement (LA, R&R) of those displaced by the project. “The LA, R&R component was earlier Rs 3,000 crore. It has now increased to Rs 28,191.03 crore as a result of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, enacted by the Centre,” the official said.
Reddy has also written about the high land acquisition, resettlement and rehabilitation cost in his communication to Modi. “When LA,R&R cost alone for rehabilitating Project Displaced Families itself is Rs 28,191 crore, how then is it possible to complete the entire project at a capped cost of Rs 20,398 crore?” he has asked
Reddy has requested the PM to prevail upon the Jal Shakti and finance ministries to give the investment clearance for the second revised cost estimate as recommended by the PPA and the other central agencies so that that project can be completed by December 2021.
“It’s not that the Jal Shakti ministry was kept in the dark. The revised cost was also recommended by other central agencies including the Central Water Commission, Technical Advisory Committee and Revised Cost Committee,” said the official quoted above,
Once complete, the Polavaram project will benefit all the 13 districts of Andhra Pradesh and help irrigate nearly 3 lakh hectares of land. It will also provide drinking water facilities to 540 enroute villages covering 25 lakh populations, particularly in Visakhapatnam, East Godavari and West Godavari and Krishna districts.
Also read: Jagan-KCR bonhomie is history as friendship sours over water dispute and inter-state buses