CAG unveils financial irregularities in Kaleshwaram project

The Comptroller and Auditor General of India (CAG) has unveiled startling financial irregularities in the implementation of the Kaleshwaram project in Telangana.

In its 260-page report presented in the Telangana State Legislative Assembly on Thursday, the CAG highlighted numerous discrepancies in the project's finances.

The cost of the Kaleshwaram Project is now anticipated to surpass Rs 1,47,427.41 crore, significantly exceeding the projected cost of Rs 81,911.01 crore presented to the Central Water Commission (CWC).

In its key findings, the CAG said that the Government of Telangana did not grant administrative approval for the entire project but issued 73 separate approvals totalling Rs 1,10,248.48 crore. No official orders on the funding pattern for the project were issued. Out of the total expenditure of Rs 86,788.06 crore (as of March 2022), Rs 55,807.86 crore (64.3%) was covered by off-budget borrowings (OBBs) raised by Kaleshwaram Irrigation and Project Corporation Limited (KIPCL).

The project's Benefit-Cost Ratio (BCR) was inflated, indicating its economic unviability. With the latest estimated project cost of Rs 1,47,427.41 crore, the BCR stands at 0.52, implying that every rupee spent on the project would yield only 52 paise.

The peak energy demand for the project exceeds the average daily energy consumption for the entire state in the fiscal year 2021-22, posing a significant challenge in providing power for lift irrigation schemes.

The absence of a comprehensive plan detailing funding sources for a project of this magnitude suggests improper planning.

Against the targeted new Cultivable Area (CA) of 18.26 lakh acres, only 14.83 lakh acres have seen the development of the distributary network. The actual command area created is a mere 40,888 acres (as of March 2022). Seventeen works costing Rs 25,049.99 crore were awarded before the Detailed Project Report (DPR) approval, leading to a lack of due diligence.

Due to changes in the project works, certain executed works became redundant, resulting in a loss of Rs 767.78 crore.

Out of the 56 project works, only 12 have been completed, 40 are ongoing, and four have not commenced (as of March 2022). Identification of lands required for the distributary network is still incomplete.

The possibility of undue benefits to contractors for supplying and commissioning pumps, motors, etc., totalling at least Rs 2,684.73 crore, cannot be ruled out. Additionally, the post-tender inclusion of a price adjustment clause resulted in an avoidable payment of Rs 1,342.48 crore.