CAG flags violation in tender norms, non-assessment of bid capacity in Karnataka’s Yettinahole Project

Out of 44 works for which the Karnataka Neeravari Nigam Limited/ Visvesvaraya Jala Nigam Limited (VJNL) failed to adopt standard tender documents, “43 works costing Rs 16,807.31 crore were awarded to the contractors without assessing their bid capacity,” the report noted.

The non-assessment of bid capacity risked entrusting works without obtaining reasonable assurance that a particular contractor could execute the work successfully, it said, noting that works costing Rs 14,805 crore were awarded to only seven contractors.

CAG also rejected the government’s response to this deviation. In March 2024, VJNL responded to the CAG, saying that the bid capacity conditions were relaxed to encourage more bidders. “Reply is not acceptable as KNNL/VJNL awarded major chunks of the works without assessing bid capacity in violation of Government orders,” it said.

Referring to an incident in July 2017, CAG noted that a contractor had uploaded fake work done documents while submitting his tenders for package four of the project under Phase 1 (carried out in five packages).

“VJNL neither blacklisted a contractor nor forfeited his EMD (earnest money deposit) of Rs 3.92 crore even though he had uploaded a fake work done certificate while submitting his tenders for package 4. Though the contractor was not successful in securing the contracts, the tender was processed considering the agency as one of the eligible bidders,” the report said.

Apart from this, the CAG has also highlighted irregular payments to contractors, excess and unjustified expenditure, among other issues.

The Project, estimated to cost around Rs 23,251 crore, involves diverting the west-flowing Yettinahole stream from Sakleshpur in Hassan district to the parched regions of Kolar and Chikkaballapur districts. The first phase of the project was inaugurated in September 2024. The project is expected to be completed by the end of 2027.