Complaint seeking Cancellation of Highway Tenders worth Rs 12000 crores, Rebudgeting, reprioritizing of Expenditure.

To Mr S. Krishnan IAS, Additional Chief Secretary to Government, Finance Department, Fort St George, Chennai – 600009

Mr.A.Karthik IAS, Principal Secretary to Government, Highways and Minor Ports Department, Fort St George, Chennai – 600009

Sir, Sub: Complaint seeking Cancellation of Highway Tenders worth Rs 12000 crores, Rebudgeting, reprioritizing of Expenditure.

I am writing to you for immediate corrective action on the colossal waste of taxpayers money through floating of unnecessary Highway road project tenders. Particularly, when the state is undergoing a severe economic stress, such money should be put to good use in terms of providing economic relief for citizens, relief for micro and small enterprises and Covid expenses. We see that the Highways Department is finalizing almost tenders for more than Rs 12000 crores between May 2020 and July 2020.

1. Preponement and Unnecessary urgency in floating of tenders

a) Generally, the tender notices and finalization of Comprehensive Road Development Infrastructure program (CRIDP) tenders happens in the month of September of every year. In 2019 as well, the CRIDP worth more than Rs 4500 crores were floated in the month of August/ September 2019. Majority of the road laying under CRIDP for last year has not even been executed so far. We are also seeing a rapid increase of Corona in Tamilnadu every day. However, during this period, the new CRIDP tenders which deals with widening and laying of roads in each district has been preponed and invited in the month of May itself in the middle of the pandemic. This raises a very important suspicion that the pandemic is being used to float huge tenders when there is minimal public scrutiny and while there is no valid reason for preponement of these tenders this year.

b) In CRIDP this year, the Highways Department has invited tenders for more than 5000 civil works and the total value of works is about Rs. 5,500.00 Crores. The tenders are now active in the tntenders.gov.in website. The Chief Engineer, Highways Department, Construction and Maintenance with an intention of putting these works to tender urgently, with the active support of the Superintending Engineers instructed the subordinates to prepare the estimates in quick time. The above officers showed haste and exerted pressure on the field staff when there is no urgency at all.

2. Prioritizing of Expenditure

a. During the Tamilnadu Budget allocation in Feb-March 2020, around Rs 15000 crores were allocated to the Highways Department for various highways projects. However, the budget allocation was done at a time when we had projected an increased revenue over the previous years and during the pre corona period. However, Covid has changed the entire scenario. There are 2 important factors that needs to be considered. Firstly, the tax revenues are taking a huge hit and secondly, there is now need for reprioritizing the diminished budget.

b. Given that there is going to be a big drop in revenue in terms of taxes this year, it is important that the highways budget is also proportionately decreased so that it doesn’t eat into the budget of other departments.

c. Secondly, Rangarajan Committee has been formed by the Government of TamilNadu and one of the mandate of the Committee is to reprioritize expenditure. The Government’s focus on expenditure at this point of time should be on Health Department dealing with Corona, economic relief for all people of TamilNadu and economic incentives, relief and loan write offs for micro and small enterprises. However, even without waiting for the recommendations of the Rangarajan Committee, tenders worth close to Rs 12000 crores is being allocated and spent in Highways on unproductive projects. The recommendations of the Committee will be rendered useless if such huge unnecessary expenditure are made now without waiting for their report and without carrying out the rebudgeting exercise.

3. Covid violations and spread in Highways Department

a. The enormity of the work of collecting field particulars, collating the details and preparation of estimates for the Highways Tenders left the subordinates moving from place to place in batches. The movement of subordinate officers caused the spread of Corona virus and it is reliably learnt that many people in Chennai and Madurai were either hospitalized or quarantined after they complained Corona symptoms.

b. Thousands of cases are reported daily for the past few days and the authorities are imposing strict measures to contain further spread of the virus. The office of the Chief Engineer is situated in Chennai. It is reliably learned that last month, under the instructions of the Chief Engineer, the Superintending Engineers directed the subordinates in their control, who are working in different Districts to come to their offices to check the estimates and then to go to the Chief Engineer’s office at Chennai to attend the works relating to estimates. When there is no necessity at all for the subordinates to travel to the places where the offices of their Superintending Engineers are situated and to Chennai where the office of the Chief Engineer are situated, the Chief Engineer and the Superintending Engineers irresponsibly asked the subordinates to come to their offices and sent them to Chennai and this act caused the faster spread of Coronavirus.

c. While they move hither and thither to get thousands of estimates sanctioned, they carried Coronavirus from Chennai to other places of the State of Tamil Nadu. The Chief Engineer and the Superintending Engineers acted totally without plan and defeated the very purpose of the lockdown and restrictions. This can be verified with the CCTV footages of the offices of all the district and Chennai office. This can be further checked with the Aarogya Setu Application with the field officers which has been mandated for all Government employees.

d. In all the above cases, the social distancing norms fixed by the Government is thrown to winds, because tens of subordinates from other towns gathered in small rooms meant for one or two employees. This situation arises because of the compulsion imposed by the Chief Engineer and the Superintending Engineers.

e. Because of the above, it is reliably learnt there were around 20 Highway Engineers who were affected by Covid in Madurai circle alone last month after some of them visited Chennai office.

4. Cost of the tender

a. The cost of estimates prepared in a hurry seems to be grossly inaccurate and boosted which will further create losses to the exchequer. For example, the Performance based maintenance contract for Thanjavur – Phase I & II for Rs 1947 crores for 5 years is given a cost estimate of Rs 2.33 crore per Km while all the 7 past performance based maintenance contracts floated had a cost of Rs 60 lakhs to Rs 1.3 crores per Km. This huge increase in cost is arbitrary and defies any rationality. Even the Sivagangai PBMC awarded just 3 months before approval of this project had a cost estimate of Rs 1.28 crore / Km only.

b. It must be noticed that the Highway Engineers were not in a position to travel to the field for so many thousands of roads to get the estimate amidst the Covid scare. So many estimates seem to have been created namesake with great urgency without properly evaluating the field.

5. Good roads being relaid

a. One can understand if these projects focus on roads that are in poor condition to be relaid. However we find that many roads that are selected for relaying are good roads. This raises a very important question on the reason behind floating these thousands of crores of tenders.

b. On the inner ring road near Kolathur Senthil nagar, Arappor Iyakkam found that the service road was relaid by the Highways Department on 28/02/2020. However, the service road was in very good condition and did not require any relaying. The stretch was laid only 3 years back and was in good condition. The photos of before and after relaying has been attached (Annexure 1)

c. Similarly, the Sirkazhi Thirumullaivasal main road at Thirumullaivasal Bus stop in Sirkazhi Taluk, Nagapattinam District has been relaid last month. The road was again in very good condition and did not require any relaying. However, we found that the road was relaid without milling the existing surface and increasing the height of the road while no relaying was required originally (Annexure 2)

d. Many of the roads to be handed over under Performance based maintenance contract of Thanjavur has been found to be in very good condition and therefore, relaying of these roads is unnecessary. Sample of couple of roads are attached (Annexure 3)

e. The above are only samples of roads and we find this pattern of selecting good roads for relaying as a norm in Highways Department.

f. All the above shows that many of the highway tenders are completely unproductive and a huge wastage of taxpayers money. When the state is reeling under severe financial issues, such wastage of tax payers money is unacceptable.

g. The samples of the above good roads have been attached in the annexure.

6. Selection of Roads for widening:

a. It has also been reliably learned that many roads selected for widening has been chosen on the basis of faking of increased traffic flows and that there is not enough traffic flows that mandates widening of these roads.

b. Therefore, an independent committee should look into whether the traffic flows recorded by the Engineers exist in real time or not and whether these projects are really productive or not.

7. Quality Certificate

a. It is learned that there are a total of 8 quality control divisional engineers in Highways in total who have to visit the plant of the Contractor physically, verify and provide with the Plant/ machinery certificates. It is unclear how these 8 Engineers in the middle of Covid can actually visit the plants of hundreds and thousands of prospective bidders in 37 districts of Tamilnadu during Covid to certify their plants as there are close to 1000 tenders that have been floated. Apart from these , how can they ensure the quality of the road laid.

b. Given that the physical visits are not possible, these conditions of plant/ machinery certificate seems to be used only to eliminate competition and keep prospective bidders out of the race and to provide certificates only for prefixed bidders/winners of the tenders.

8. Physical points of contact & tender fixing

a. Corruption and tender fixing/ collusion can be eliminated only when there is no physical point of contact. However, Highway tenders continue to have various physical points of contacts to eliminate prospective bidders. The claim by Minister of Highways and Chief Minister Mr Edappadi Palanisamy that these are e-tenders with no physical points of contacts are completely false as can be seen below.

b. Within Highways, a huge difference in physical point of contact between tenders floated with support of development banks and state government supported tenders exist. While the norms of the development banks mandate electronic tenders with almost nil physical points of contact, the state Govt supported tenders have continued to create a blockade for prospective bidders through these artificially created physical points of contact.

c. It can be seen that the Thanjavur PBMC tenders and the CRIDP tenders etc supported by the State Government has a clause stating that

i. “The contractor should produce the documents for own possession of sufficient Plants & Machineries and obtain certificate from competent authorities as specified in the tender documents for working condition of the Plants & Machineries to complete the work in time with quality. ii. The original EMD and all other original / attested technical bid document as uploaded shall be received by the Superintending Engineer (H), C&M, Trichy Circle on or before dd/mm/yyyy, 15.00 Hrs failing which, the bid shall be summarily rejected”

d. However, no such physical points of contact of plant/ machinery certificate and asking for original/ attested documents exist in the Chennai Kanyakumari Industrial Corridor road projects even though both these projects have been floated by the Highways Department.

e. Why are the bidders required to take DD and give it to Engineers for EMD? Why is there no online payment of EMD yet ?

f. This shows that the physical points of contact have been brought into the tender process in state supported tenders to enable favouritism, prefixing of tenders for select contractors and thereby paving way for Corruption.

9. Unproductive and huge package projects do not boost economy but leads to Corruption:

a. It has been normal practice for the TamilNadu Government to claim that these road infrastructure projects boost the economy. However, it must be understood that the current model of laying or widening the good roads with little traffic flows do not provide any economic advantage to the users of the road.

b. Secondly, the current model of packaging the tenders into big ones eliminates most of the competition and is aimed at favouring few big contractors alone. Road laying can be done efficiently by all class I contractors. While there are many Class I contractors in each district, a lot of roads are packaged into large budgeted ones eliminating many class I contractors through eligibility requirements and machinery/ plant certificates. This results in a select few winning the tender work again and again and therefore it has becomes very easy to fix tenders and do Corruption. This can be seen from the very limited competition of only 2 to 3 bidders participating in most of the Highway tenders.

c. It is reliably learnt that most of the 7 Performance based maintenance contracts in the past were awarded to Highways contractor Nagarajan Seyyadurai’s SPK firms. Income tax raided Nagarajan Seyyadurai and seized Rs 170 crores of black money. This shows the amount of Corruption taking place in State Highways Department. It must be noted that Nagarajan Seiyadurai is the business partner of the relative (Sambanthi) of our State Highways Minister and Chief Minister Mr Edappadi Palanisamy.

10. Failure of Bureaucracy and senior civil servants

The TamilNadu Government issued circulars barring Govt Depts and officials from purchasing equipment. Machinery, motor vehicles, furniture and had cut down on exhibitions and trainings. Journey by air for public servants were restricted. All these measures were announced taking into account the impact on revenues during Covid. However, as senior civil servants incharge of Finance and the Highway Departments, it is appalling to see the irrational approval of huge budget for unnecessary Highways projects resulting in a huge wastage of our taxpayers money. Not only the Government, but the citizens are also going through a severe financial stress during the times of Covid. You have been given an important job of being trustees of our public money with the faith that you will spend them judiciously on welfare of people. However, it is painful to see senior civil servants like you failing the people of Tamilnadu and breaching the trust that we had posted in you. It is hightime you took corrective measures. For the reasons stated above,

I kindly request you to

**1. Cancel all the tenders worth Rs 12000 crores and immediately save the colossal wastage of taxpayers money.

2. Rebudget and reprioritize the expenditure as per recommendations of the Rangarajan Committee and feedback of unorganized sectors, micro and small enterprises.
3. Identify roads that are in poor conditions and refloat the tenders only for the necessary roads through small budget tenders creating the real economic boost required.**

Sincerely

Jayaram Venkatesan Convenor – Arappor Iyakkam Ph: 9841894700