Hyderabad: The PC Ghose Commission of Inquiry into the allegations of corruption and irregularities in the construction of the Kaleshwaram Lift Irrigation Project has dug up massive financial and other misdeeds in the execution of the project. In its 650-page report submitted to the state government recently, the Commission has brought to light undue financial favours as well as excess payments to the contracting agencies involved in the construction of the barrages under the Kaleshwaram project.

"Post-tender inclusion of price adjustment clauses in five agreements led to an avoidable payment of price escalation of Rs. 1,342.48 crore. Other inflated rates, undue benefits/excess payments to contractors, including L&T company, amounted to Rs. 612.51 crore", the report said.

The L&T company, which constructed the Medigadda barrage, could be the big beneficiary of the excess payments from the state government.

The Commission took serious note of the excess payments to the contract agencies and recommended the government to go for a financial investigation into the matter of raising loans by the Kaleshwaram Irrigation Project Corporation Limited (KIPCL) and disbursing the same and the ultimate beneficiary. It suggested to the government to also go for a deep, critical and objective study in respect of observance or otherwise of the exact rules and laws in the matter of off-budget borrowings by the State and KIPCL for construction of the three barrages - Medigadda, Sundilla and Annaram.

The procedure adopted for processing and scrutiny of the bills submitted by the agencies (including regarding price adjustment) must also to be investigated in depth, it suggested.

The Ghose Commission report included an incisive analysis of the escalation of the project cost from Rs 38,500 crore to Rs 71,436 crore for Kaleshwaram (as per CM’s letter in 2016), and later saw revised administrative approvals totaling over Rs.1,10,248.48 crore by March 2022.

The Commission also pointed to the Expert Committee’s view that shifting of the project from Tummidihetti to Medigadda would render “approximately Rs. 6,000 crore” of work already done as “infructuous”, plus an additional Rs. 1,500 crore for tunnel lining/filling, and extra land acquisition cost.

The report pegged the burden of Off-Budget Borrowings (OBBs) by the KIPCL with state government guarantees at Rs. 87,449.15 crore (as of March 2022). The Commission observed that the burden of repayment of the loan and interest is likely to fall on the State Budget.

As of September 2024, Rs 29,737.06 crore had been paid towards the principal and interest. The balance principal is Rs. 64,212.78 crore, with approximate additional interest payable being Rs. 41,638 crore. The Commission pointed out that the loans were diverted/transferred to the government (Rs. 1,690.09 crore) and used for margin money (Rs. 4,011.52 crore), incurring additional interest burdens.