Low-cost housing scheme: Irregularities force Maharashtra govt to cancel Rs 3,612-cr tenders

The housing minister declined to answer when asked if there would be an inquiry to hold those responsible for the lapses accountable.

Written by Sandeep Ashar | Mumbai | Published:November 8, 2016 5:47 am
mumbai, maharashtra housing initiative, mhada flats, mhada irregularities, maharashtra affordable housing, mhada houses, Pradhan Mantri Awaas Yojana. pm modi mhada, india news Under PM Modi’s flagship low-cost housing scheme, MHADA had on October 24 issued tenders for construction of 33,510 houses for the economically weaker section. (Express photo by Vasant Prabhu/Representational)

The BJP government’s affordable housing initiative has come under the scanner after major irregularities were found in tenders worth Rs 3,612 crore floated for building such homes near Mumbai. The Maharashtra government has stayed the execution of the tenders for now. Under Prime Minister Narendra Modi’s flagship low-cost housing scheme Pradhan Mantri Awaas Yojana, the Maharashtra Housing and Area Development Authority (MHADA), the nodal agency for implementation of PMAY in Maharashtra, had on October 24 issued tenders for construction of 33,510 houses for the economically weaker section and 6,250 other houses for the low-income segment at 11 proposed construction sites in the Mumbai Metropolitan Region (MMR) and the Raigad belt in Konkan region. MHADA’s Konkan Board had floated these tenders inviting contractors to build these houses on turn-key basis at a collective cost of Rs 3,611.96 crore.

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Speaking to The Indian Express, Housing Minister Prakash Mehta said these tenders had been scrapped following discussions with Chief Minister Devendra Fadnavis. These tenders were the first ones issued by the Maharashtra government for PMAY. Top sources said senior bureaucrats in the housing department had raised objections to the tenders after a construction major wrote to the government, complaining that the conditions were “designed to favour a specific contractor”. The department appeared to concur with the construction major’s viewpoint after investigating the matter. The sources said the government was advised to cancel the tenders to avoid a major controversy.

According to information, the tender conditions gave contractors with previous experience of building public housing projects higher weightage in technical evaluation. “A contractor with previous experience in a government project was assigned 100 per cent weightage, whereas those who have only build mass private projects would have been assigned just 50 per cent weightage. The condition had been introduced specifically to favour agencies executing government project,” said a senior government official, who did not wish to be named.

Since 1984, it was pointed out, a particular construction company had enjoyed a “near monopoly” in public housing projects. Further, a commercial criterion was also introduced for evaluation of interested applicants on the basis of works carried out with the government over the past seven years. “This techno-commercial condition introduced in the tender was against the general industry practice,” said the official.

Yet another contentious condition was the insistence that the contractor must have experience in building homes using precast technology. “This would have limited the potential of all the potential contractors in the country, and explicitly favoured a specific contractor,” said a top source. Mehta, meanwhile said, “The condition also violated the state government’s own policy of adopting a technology-neutral approach for housing projects.” Contending that it wanted the break the monopoly enjoyed by certain players in the public housing industry, the BJP government had adopted this policy on August 6, 2015. The housing projects were planned on lands in Kalyan (5 sites), Vasai (2), Thane (1), Karjat (1), Khalapur (1) in the MMR, and Raigad (1) in Konkan.

Another irregularity brought to light was that in the case of four construction sites — two in Vasai, and one each in Karjat and Khalapur — the tenders had been issued without the mandatory locational clearance of the Centre State Monitoring Committee for PMAY projects. The four lands in question, which are reportedly situated in green zones, are yet to be acquired by the MHADA or the housing department. “The tenders were brought out even as there was no administrative or technical approval. Even the detailed estimates for the work to be carried out on these sites had not been worked out. Floating tenders without possessing land or getting the necessary approvals can lead to technical and legal hitches at a later date,” the department has said. Questions were also raised regarding the lack of “adequate budgetary provision” with the Konkan board for taking up Rs 3,612-crore works.

“It was felt that some of the tender conditions would have favoured a particular contractor. The PMAY is our flagship scheme. We want to invite all potential contractors to participate in this scheme. So, in consultation with the chief minister, we decided to rescind the tender. The tender will be reissued before the end of the month with revised conditions that encourage a level playing field,” said Mehta. Keen to perform bhoomipujan for over 96,000 houses under the PMAY before the code of conduct for the crucial civic elections in Mumbai and Thane kicks in early next year, the government has however decided to bid out contracts even for the four sites whose locational clearance and approvals are not in place. “The clearance and the approvals are in the pipeline,” said Mehta.

The housing minister declined to answer when asked if there would be an inquiry to hold those responsible for the lapses accountable. While MHADA Vice-President S S Zende refused to comment on the matter, a senior official blamed a corporate war between two construction majors for the impasse. “The government has directed us to liberalise the tender conditions further. We will act on the orders,” he said.