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LATEST NEWS UPDATES | Road ministry panel wants CBI probe into Lucknow-Muzaffarpur highway project-Nidhi Sharma

Road ministry panel wants CBI probe into Lucknow-Muzaffarpur highway project-Nidhi Sharma

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published Published on May 17, 2012   modified Modified on May 17, 2012

A probe panel of the road ministry has recommended a CBI investigation into allegations of fraud against private contractors involved in the Lucknow-Muzaffarpur highway project.

The inquiry committee, instituted by the Ministry of Road Transport and Highways, supported findings of the World Bank Institutional Integrity Unit report, which alleged fraudulent practices and graft by private contractors involved in the Lucknow-Muzaffarpur highway project.

The committee, formed in April by minister CP Joshi, recommended that the World Bank Institutional Integrity Unit report should also be made public to give the right signals on transparency. According to a ministry official, the inquiry report pointed out that World Bank gives billions of dollars of loan to India for infrastructure sector and it was the responsibility of the Centre to uphold the highest standards of propriety by asking CBI to investigate the matter.

There was a two-level probe ordered after the World Bank Institutional Integrity Unit report said that private contractors, working on upgradation of Lucknow-Muzaffarpur highway project, diverted building material and finances meant for the highway to other projects (including a realty project in Qatar).

The report said contractors furnished fake bills and invoices of building material showing utilisation of the first installment of money. The extent of falsification is about 15 crore. The report alleged that facts were misrepresented in a similar manner to draw a second installment from NHAI.

In gross violation of rules, building material and finances meant for Lucknow-Muzaffarpur highway upgradation were diverted to other projects (including a realty project in Qatar), the report alleged. This had an adverse impact on the progress of highway work.

Though there was lower level inspection staff to report tardy progress, the Integrity Unit alleged that district administration officials and NHAI engineers were on the pay-roll of contractors.

The Integrity Unit's officials examined every invoice submitted by contractors to obtain advance from NHAI and carried their probe into remote villages of Nepal, where they traced three suppliers of building material.

The suppliers said the bills that had been issued in their name were fake. In some cases the serial numbers were missing and in other bills the authentic seals were not there. The extent of 'falsification' was over 50 crore.

The officials also visited the site offices of private contractors and took print-outs from a computer to show how tehsildars, local administration officers and NHAI engineers were paid 'monthly salaries' ranging between 10,000 and 25,000 to 'look the other way'.

The report points out that contractors spent over 2 crore on hotel bookings and expensive gifts like gold coins to 'influence' NHAI engineers.

The minister had asked director-general (roads) to go into the facts and then hand over his report to special secretary Vijay Chhibber for a final report. The first inquiry report is an over 100-page document, which includes documents furnished by contractors and decisions taken by NHAI.

The first-level of inquiry has not verified all the allegations of the Integrity Unit report. The second-level of inquiry has clearly said that there should be no attempt to bury the report as the Integrity Unit has taken over a year to probe the projects.

The inquiry report comes at a time when the Centre is desperately trying to shake off the impression of graft-ridden governance. Minister CP Joshi had also borne the brunt of an aggressive Opposition in the Rajya Sabha on May 3, when MPs demanded an assurance that the allegations of corruption will be investigated. Though Joshi said that the ministry was not averse to a probe by CBI, he did not commit anything on the floor of the House.

World Bank had approved a loan of $620 million for upgradation of the 468-km highway. The four-laning project was divided into 12 packages. In 2009, the World Bank pointed out to the ministry that the progress of work on four packages - 9, 10, 11 and 12 - was quite slow. These stretches were Dewapur-UP/ Bihar border (41.09 km, Progressive Construction Limited), Kotwa-Dewapur (38 km, PCL-M Venkat Rao JV), Mehsi-Kotwa (40 km, Madhucon) and Muzaffarpur-Mehsi (40 km, PCL-M Venkat Rao JV).

The World Bank monitored the 12 packages for a year. While the progress on all stretches improved, four packages (9, 10, 11 and 12) continued to lag behind. On the request of the government, the World Bank restructured the project.

Restructuring meant that though the loan amount remained the same at $620 million, upgradation work of four packages was taken out of the ambit of the project. World Bank provided the same amount for the first 8 packages and asked the government to use the remaining amount for upgradation of NH-1 Delhi-Panipat (it is India's first green highway) and institutional reforms in NHAI.

After the termination of contracts, the Integrity Unit investigated the four contracts (9,10,11 and 12) to check what went wrong. The 'corrupt practices' and the performance of contractors has had a direct impact on the cost of the project, which has more than doubled.

The Bank loan will close on June 30 this year. ET learned from the World Bank that four-laning in all eight contracts is substantially complete. However, the contracts have been completed with a time over-run of almost three years leading to cost overrun of up to 50%, including cost escalation, particularly in first four contracts in Uttar Pradesh. The funding from the Bank would be restricted to the original loan size of $620 million. The Centre will have to bear the cost over-run.

The Economic Times, 17 May, 2012, http://economictimes.indiatimes.com/news/politics/nation/road-ministry-panel-wants-cbi-probe-into-lucknow-muzaffarpur-highway-project/articleshow/13180982.cms


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