Kaleshwaram cost to exceed Rs 1.4 lakh cr, likely corruption of Rs 2600 cr: CAG

The CAG report on Kaleshwaram stated that the possibility of undue benefit of at least ₹2,684.73 crore to contractors working on the project cannot be ruled out.
Kaleshwaram irrigation project.
Kaleshwaram irrigation project.
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A new report released by the Comptroller and Auditor General of India (CAG) on Friday, February 15, has revealed that the cost of the Kaleshwaram Lift Irrigation Project is likely to exceed Rs 1.4 lakh crore (1,47,427.41) as against Rs 81,911 crores, the cost projected to the Central Water Commission (CWC). The Kaleshwaram project, a flagship project of the previous Telangana government led by the Bharat Rashtra Samithi (BRS), has been mired in controversy and has been credited as a major reason for the BRS’ loss in the state Assembly elections held in November 2023. 

The CAG report also stated that out of the total expenditure of ₹86,788.06 crore incurred on the project as on March 2022, 64.3%, ie ₹55,807.86 crore was met from the off-budget borrowings raised by the Kaleshwaram Irrigation Project Corporation Limited (KIPCL). KIPCL is a special purpose vehicle (SPV) set up by the BRS government to handle finances related to Kaleshwaram. 

“The possibility of undue benefit of at least ₹2,684.73 crore to the contractors for supply and commissioning of pumps, motors etc., cannot be ruled out,” the report stated. 

The Kaleshwaram project became a major talking point after six piers of the Medigadda (Lakshmi) barrage, one of the three main barrages of KLIP, sank on October 28, 2023. While BRS has defended the now six-year-old project, the Opposition, the Congress and the BJP, flayed the government and said the sinking of piers is proof of shoddy management. The Telangana Congress in its election manifesto also promised a judicial inquiry into alleged irregularities and corruption surrounding the construction of the project and since coming to power has been heavily critical of it.

In an earlier CAG report published in March 2021, it was noted that out of the total loans guaranteed by the then state government, 65% pertained to two SPVs: the Telangana Drinking Water Supply Corporation for implementation of Mission Bhagiratha and the KIPCL for implementation of Kaleshwaram Project. The 2021 report also noted that many of the institutions did not have revenue resources to repay the loans provided by the government. This because projects including the Kaleshwaram one would hardly generate any revenue as water for irrigation was provided at nominal rates.

The current report also says that the Telangana government has not accorded administrative approval of the project as a whole and instead it issued 73 separate approvals, the amount for which aggregates to ₹1,10,248.48 crore. “There are no 

orders from the Government about the funding pattern for the project,” the report noted further adding that the benefit-cost ratio (BCR) of the project was inflated. 

“.......every rupee spent on the project would yield only 52 paise. It clearly indicates that the project was, ab-initio, economically unviable,” the report read, adding that Kaleshwaram was “improperly planned”. The CAG further noted that ₹25,049.99 crore were awarded for 17 works even before approval of the Detailed Project Report (DPR). “Out of the 56 project works, only 12 works were completed, 40 works were ongoing while 4 works have not even commenced, as of March 2022,” it noted. 

Chief Minister Revanth Reddy has stated that it was ‘utterly negligent’ of the previous government for spending over Rs 1 lakh crore without a Detailed Project Report (DPR) in place, adding that a Vigilance report on Medigadda will be tabled in the Assembly.

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