Hyderabad: The irrigation department has failed to recover a 5.95 crore mobilisation advance paid to M/s Gammon India for the Modikuntavagu irrigation project in Khammam, after the contractor failed to complete the work. According to the CAG report, the contract, awarded on an engineering, procurement and construction (EPC) turnkey basis, was approved at 124 crore. The department also misplaced the bank guarantees (BGs) submitted by the contractor, preventing recovery of the advance.The govt awarded the contract despite incomplete land acquisition, with 1,232 acres of forest land still pending clearance as of July 2005. The audit report noted that acquisition of patta land for the main canal had been completed in certain reaches, and the agency was instructed to commence work on the main canal in those sections.Despite several reminders and notices, the contractor did not begin the work. The department could not recover the mobilisation advance from running bills, as the contractor did not execute the work and the value of bills did not reach 10% of the contract value required to initiate recovery.“Despite non-commencement of work, no efforts were made by the department to close the contract and recover the advance, along with interest, by encashing the bank guarantees. It was only in April 2019 (i.e. more than 11 years after the stipulated date of completion) that the State Level Standing Committee recommended foreclosure of the contract,” the report stated.The irrigation department recovered 5 crore of the mobilisation advance by encashing the BGs but could not recover the remaining 95 lakh, as it had misplaced the guarantees and the concerned bank did not respond to requests for encashment in the absence of the original documents. The audit report further stated that irrigation officials failed to recover interest amounting to 6.89 crore accrued on the advance between March 2006 and March 2023. The CAG observed that non-recovery of this interest resulted in undue favour to the agency.
