Special team to probe SNC Lavalin deal

The Hindu
August 2, 2005

The Government has decided to constitute a special team to complete the Vigilance inquiry into the contract between the Kerala State Electricity Board (KSEB) and the Canadian company SNC Lavalin for the renovation and modernisation (R&M) of the hydel projects at Pallivasal, Sengulam and Panniar.

In a press release here on Monday, Director of Vigilance and Anti- Corruption Bureau Upendra Varma said the team was being constituted as per the directive of Chief Minister Oommen Chandy. The team would be asked to complete the inquiry within six months.

The Comptroller and Auditor General of India (CAG), in his draft audit report on the deal sent to the KSEB for clarifications last month, had remarked that the “entire expenditure of Rs. 374.5 crores” incurred on the R&M project between 1997 and 2001 “was rendered wasteful.” State secretary of the CPI(M) Pinarayi Vijayan was the Electricity Minister when the contract for the project was signed.

Draft audit report

The draft audit report also noted that the R&M efforts did not result in any improvement in power generation at Pallivasal, Sengulam and Panniar, which had a combined generation capacity of 115.5 MW of electricity. On the contrary, because of various technical defects in the renovated equipment, the power stations at these three places did not achieve the pre-renovation generation levels when the R&M was completed in 2001, according to the draft audit report.

The SNC Lavalin had also agreed to provide the State Government a grant of Rs.98.30 crores for the Malabar Cancer Centre at Thalasserry as a precondition for being awarded the contract to execute the project with Canadian financial assistance.

The draft audit report noted that the cancer hospital received only Rs. 8.98 crores out of this promised grant.

The issue had figured prominently in the State Assembly last month, pushing the Opposition CPI(M)-led Left Democratic Front on the back foot when the House took up a no-trust motion against the Congress-led United Democratic Front Government.

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