Caught between inflated bids and incorrect estimates, Pune’s super projects stutter to start

PUNE Eighteen months ago when the Competition Commission of India (CCI) imposed a fine on six firms for “bid rigging”, and “collusive bidding”, in a Pune Municipal Corporation (PMC) tender for garbage processing plants, the “civic cartel” nexus at work in the corporation was exposed.

This is the second case of bid rigging in the PMC. The first case involved tenders for thermal composting garbage plants in 2014.

The CCI order comes after a complaint was filed by Nagrik Chetna Manch, a city-based non-governmental organisation (NGO), on March 3, 2017. The NGO alleged that three firms, SAAR IT Resources Private Limited, CADD Systems and Services Private Limited and Pentacle Consultants (I) Private Limited, had rigged a tender floated by the PMC for carrying out geo-enabled tree census in 2015.

In fact, “questionable” bids have been responsible for stalling mega projects, such as the Rs 2,055 crore 24x7 water scheme, Katraj-Kondhwa road (Rs 149 crore), and the Rs 5,192 crore High Capacity Mass Transit Route (HCMTR).

The 36-km long inner ring road promises to improve city’s traffic; however high costs could make it financially unviable, say citizen activists.

In the latest case, the lowest bid that PMC received for HCMTR, also known as the elevated ring road, was 44 per cent higher than the estimated cost of the project. While PMC has not officially opened the tenders, the Nagrik Kriti Samiti (NKS), or peoples’ action committee has sought cancellation of the project citing lack of financial feasibility. While bids haven’t been opened as yet, the PMC has not rejected the NKS claim, and that of opposition leaders, that the bid is inflated.

“Significant discrepancy in the estimated project cost and the bid quotation raises questions regarding financial feasibility of the projects and merits a re-evaluation of the costing by third party. The lowest bid for the HCMTR tender was Rs 7,535 crore, 44 per cent higher than the estimated project cost of Rs 5,192 crore,” said NKS in a recent press statement.

This isn’t the first instance PMC has received a bid higher than the estimated project cost. Two years ago, for the 3.5 km Katraj-Kondhwa road stretch, PMC had to invite tenders thrice and finally approved a tender of Rs 149 crore, the fourth time. This was, however, still higher than original proposal estimate of Rs 120 crore. The first tender the civic body had received was of Rs 215 crore, much higher than estimated cost, forcing a retendering.

In February 2018, PMC approved 24x7 scheme after standing committee of the PMC gave its nod to the project and allotted the work to Larson &Tourbo and Jain Irrigation Company. Earlier the project’s estimated cost was Rs 2,600 crore and tenders were 26 per cent higher, which could have increased the project cost to Rs 3,100 crore.

After opposition from various political parties, then chief minister Devendra Fadnavis intervened in the matter and ordered the scrapping of the process. Fadnavis had asked for a re-tendering of the project following which the project cost came down to Rs 2,055 crore, Rs 1,100 crore less than the estimate.

Civic official explains inflated tenders

Rubal Agarwal, additional commissioner, maintained that PMC is taking efforts to maintain transparency, while adding that higher inflated bids may have been the result of “another website through which bids were filed”.

“Earlier the tenders in PMC were being filed through a private website which was run by a contractor for free. Later, we found that the contractor was charging Rs 100-200 per tender. It was not transparent and accessible to all which is why from September 1, we decided to use the state government website, www.mahaetender.com,” she said.

According to Agarwal, the website is transparent and the time limit cannot be extended, unless the PMC decides so. “Maybe the earlier tenders that came through the private website were quoting inflated charges but we are taking steps to make the tendering process more transparent and accessible in the public domain too,” she said.

Consultants responsible for inflated bids: Congress

According to senior Congress leader Arvind Shinde, bids with higher than estimated costs are often justified by the consultants appointed by the civic body and consultants are appointed as per the convenience of the contractors.

“It is true that this has become a trend that the contractors often quote a higher amount and then the tenders are re-invited leading to delay or accepting the new quotation. The consultants work to support the contractors instead of working for the Civic body. There have been contractors who quote about 50-60 per cent more than the estimated cost and the tenders have been approved. The civic body has no money and the ruling party has failed to bring in any money from the State government in the past five years,” said Shinde.

Activists question consultants, contractors

Vijay Kumbhar, a right to information (RTI) activist, said the approach of the PMC is wrong, when appointing contractors and consultants. “Why do we need consultant? At present consultant is the one who also gives a loan for the project. These companies are pre-selected and this is a new way of blackmail or rather corporatisation of corruption,” said Kumbhar.

It was Kumbhar who had raised questions about river rejuvenation project and demanded the tender process be carried out afresh, while raising questions about a consultant appointed for Japan International Cooperation Agency (JICA) and the inflated proposals by bidders in Mula-Mutha river rejuvenation project being jointly implemented by PMC and Jica.

“This is a classic case where the Jica’s association with consultant firm and PMC officials was established, making it fit case for retendering,” said Kumbhar.

SCN Jatar, president of Nagrik Chetana Manch, had also pointed out how 24x7 water scheme, that promises equitable supply across the city, bid was first of higher cost. Initial tender for 24x7 water scheme was of inflated price than estimated one following which opposition forced ruling BJP to go for re-bidding. It was Jatar who pursued bid rigging scam in PMC, which resulted in CCI imposing a fine of Rs 3.57 crore on six firms.

Ruling party aware of problems, safeguarding PMC

Shrinath Bhimale, BJP, and leader of the house in PMC, sayd, “It is true that due to various reasons the main projects are getting delayed. Along with the tendering process, land acquisition and errors in estimates are the reasons for this. JICA (river rejuvenation) and High Capacity Mass Transport tenders are above the estimate cost. PMC is taking care that the civic body does not bear the additional burden. PMC has asked the Central government’s suggestion on the JICA project and on the 24x7 water project, work is in progress.