Explained: The Kerala e-bus controversy over Swiss firm Hess AG

Chennithala alleged that the Chief Minister had hired PricewaterhouseCoopers (PwC) to provide a report that would favour the hiring of Swiss firm Hess AG as manufacturers for the e-mobility project.
A collage of Kerala Chief Minister Pinarayi Vijayan and Congress leader Ramesh Chennithala
A collage of Kerala Chief Minister Pinarayi Vijayan and Congress leader Ramesh Chennithala
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The Kerala Finance Department withheld its recommendation for the state's e-mobility project with Swiss company Hess AG, seeking more clarity. Leaked documents show that the Department had asked to know about the source of funds for the project. The revelations came to light after Kerala Finance Minister Thomas Isaac denied corruption allegations and said that the project had not been opposed by the Finance Department.

On Tuesday, Opposition Leader Ramesh Chennithala levelled fresh allegations against Chief Minister Pinarayi Vijayan, stating that the government’s deal with the Switzerland-based commercial vehicle manufacturer had been dropped after opposition from his cabinet colleague as well as the Chief Secretary. To this, Finance Minister Thomas Isaac had replied that he hadn't seen such a file.

The project

The e-mobility project relates to the Kerala government's plan to manufacture as many as 3,000 buses at a whopping Rs 6,000 crore to reduce emissions. The project is to enable the state to transfer from fossil fuels to greener, electric energy for public transport. 

Hess AG was to be a majority partner in the project that would be a joint venture with Kerala Automobiles Limited (KAL). According to Chennithala, in an alleged violation of tender norms, the firm had been allowed to take part in talks prior to the awarding of the project.

A memorandum of understanding (MoU) was agreed to be signed between KAL and Hess AG in June 2019. However, the plan fell through, according to the Opposition Leader, after the Finance Department raised objections.

The project was the autocratic decision of the Chief Minister, Chennithala said. 

Leaked documents 

On Wednesday, the controversy escalated after leaked Finance Department documents showed that the Department had raised questions about the project. A file, dated August 2019, mentions that more clarity was required as the project was between a public sector enterprise and a foreign company. 

The document, signed by the Additional Chief Secretary, said that the government of Kerala cannot procure a large number of buses without tender procedures. It states that the Kerala government does not have the resources to purchase 3,000 buses at a rate of Rs 1 crore to Rs 1.5 crore each. 

“The Administrative Department should clarify what would be the source of this fund. The Finance Department could not recommend going ahead with such a Memorandum of Understanding (MoU) by KAL unless there is a clarity on the commitment the government of Kerala is undertaking,” the document reads.

The document further said that the observations had been approved by the Finance Minister. 

‘PwC for favourable report’

With the alleged internal disagreement over the e-mobility project contract, Chennithala alleged that the Chief Minister had hired PricewaterhouseCoopers (PwC), the London-based multinational, to provide a report that would favour the hiring of Hess AG as manufacturers for the e-mobility project. 

Calling Pinarayi Vijayan a ‘master at scientific corruption’, Ramesh Chennithala said that the Chief Minister had appointed PwC as consultants to skirt rules. The Congress leader claimed, “They will clear the project with the Swiss company and the project will go ahead.”

Chennitha had alleged irregularities in hiring PwC to prepare the Detailed Project Report of the e-mobility project. The government refuted the allegations. 

CM Pinarayi responds

On Wednesday, when asked about the allegations at his daily COVID-19 press briefing, the Chief Minister said that he had referred the file to the other Ministries. 

“How can we just see a part of the document? In the file, the Chief Minister has written that it should be reviewed by the Chief secretary and the Finance Department. I myself referred the file to them. They can put in their observations in the file. It is to maintain transparency that the file was sent to these departments, so that it will be analysed properly,” he said. 

The Chief Minister added, “The Industries Department and the Transport Department were actively involved in this project. Even the Union Ministry has approved it. Some forces are trying to take away our project on e-mobility to some other places.”

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