Andhra Pradesh Chief Minister YS Jagan Mohan Reddy on Saturday wrote to Prime Minister Narendra Modi to accord investment clearance for the Polavaram project's second revised cost estimate (RCE) of Rs 55,549 crore at the earliest so that the project could be completed by December 2021. Jagan said that the second RCE has been recommended by the Central Water Commission (CWC), Technical Advisory Committee (TAC) and Revised Cost Committee (RCC), all Government of India (GoI) entities.
The Chief Minister explained to Modi about all the developments, delays and cost overruns, highlighting that there was some communication gap, resulting in confusion on the cost of the project. Jagan said that the Polavaram project has been declared a national project by the Union government at the time of Andhra Pradesh bifurcation and enshrined as a solemn promise in the AP Reorganisation Act, 2014. According to the Act, the Union government shall execute the project and obtain all requisite clearances, including environmental, forests and R&R norms.
He said the expenditure of Rs 5,136 crore incurred by the undivided state on Polavaram Irrigation Project till April 1, 2014 was considered as the share of the state government as per paragraph 5.3 of the cabinet note dated April 29, 2014.
For the purpose of executing the project, a special purpose vehicle, Polavaram Project Authority (PPA), was notified in the gazette on May 28, 2014, which will execute the project, preferably through the concerned state departments or any other expert agency.
The Chief Minister mentioned that the original cost of the project as per 2005-06 price levels was Rs 10,151 crore, which was revised under first RCE as Rs 16,010 crore at 2010-2011 price levels, which was also changed to Rs 28,920 crore by the Revised Cost Committee as per 2013-14 price levels.
However, Jagan differed with the Ministry of Finance's September 30, 2016 decision which was communicated by the Ministry of Water Resources with a condition that the balance irrigation component cost at latest price levels should be borne by AP, even as 100% cost of the project after April 1, 2014 would be borne by GoI.
As the last approval of investment clearance was done at 2010-11 price level, he said PPA asked AP to submit a realistic RCE to complete the project.
"Accordingly, the government of AP submitted a second RCE for Rs 57,297 crore at 2017-18 price level and the reasons for increasing the cost of the project are due to time overrun, change in design, price escalation, land acquisition and relief and rehabilitation," he said.
However, he highlighted that the cost of land acquisition and relief and rehabilitation alone is Rs 28,191 crore out of the second RCE. Therefore capping the entire expenditure for the project at Rs 20,399 crore at 2013-14 price levels for irrigation component only is unrealistic and not in accordance with the GoI guidelines for national projects and also a violation of APR Act, 2014, Jagan argued.
The Chief Minister told the Prime Minister that any further delay would only further increase the cost of the project, which will do no good to the notional interests of a national project.