Canadian company contract haunts LDF

Press Trust Of India
July 20, 2005

Just when the ruling UDF in Kerala appeared to have been cornered by the opposition, skeletons are tumbling out from the LDF cupboard in the form of controversial deal for power projects between Kerala State Electricity Board (KSEB) and a Canadian firm during the previous LDF rule. The Principal Accountant General’s draft review report on “renovation and modernisation” of Pallivasal, Sengulam and Panniyar hydro power projects awarded by the LDF government to SNC Lavalin found “serious deviation from prescribed procedures” in the award of the contract, resulting in wasteful expenditure worth crores of rupees.

The issue has come in handy for the UDF, which is facing criticism for its handling of law and order situation and educational policy, to turn the tables on the opposition as the contract was signed when the present CPI-M state secretary Pinarayi Vijayan was Electricity Minister. Though it was under the UDF government in 1995 that the first MoU for consultancy was signed with the Canadian company, the final supply-cum-consultancy contract was signed after Vijayan had visited Canada in 1996 to hold talks with Lavalin officials. Vijayan again visited Canada, along with the then Chief Minister EK Nayanar in July 1997, and the contract was signed in 1998. Adding spice to the fierce debate on the issue is the “cold war” between factions in CPI-M loyal to Vijayan and Opposition Leader VS Achuthanandan, who has not yet uttered a single word on the issue to defend his comrade. The CPI-M in the state said the hue and cry over the issue was part of moves to tarnish the party by hurling “unfounded charges,” as the deal was originally struck when UDF was in power. Reports say the CPI-M politburo meeting on July 28 and 29 is likely to examine whether party leaders were “involved” in creating a fresh controversy over the 1998 deal. The rift between Achuthanandan and Vijayan had widened when the latter undertook a purge in the party following his team’s victory in organisational elections earlier this year. Achuthanandan was also shown the door as editor of CPI-M mouthpieces “Chintha” and “Desabhimani,” where Vijayan loyalists have been installed.

The party is also divided over the question of accepting the National Congress (Indira) floated by K Karunakaran into the LDF fold. The Vigilance and Anti-Corruption Bureau (VACB), which is inquiring the Lavalin deal, had recently claimed that the KSEB was not handing over required files for probe into the matter. SNC Lavalin, which was identified as the supplier-cum-consultant for the renovation work at an estimated cost of Rs 243.98 crore, completed the renovation at Rs 374.50 crore in October 2001. It was found that the total power generation in the post-renovation period was much less compared with that during the pre-renovation period.

The company agreed to provide Rs 98.30 crore to set up the Malabar Cancer Centre at Thalassery, but made a payment of just Rs 8.98 crore for the hospital.

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