THE Chhattisgarh government, as reported in The Indian Express Thursday, decided not to deduct the Rs 200-crore penalty it had imposed on Tata Projects twice for not meeting its deadline in the Rs 3,057-crore rural broadband project.
Interestingly, in September 2019, two months after the stipulated 12-month deadline had passed, Tata Projects engaged a Raipur-based sub-vendor Galaxy Synergy Private Ltd (GSPL), amongst other sub-vendors, to expedite work.
While subcontracting is a norm given the scale of such projects, and Tata Projects engaged sub-vendors as per the recommendation of the Chief Secretary-led State Level Implementation Committee (SLIC), what has raised eyebrows is the work order issued by Tata Projects to GSPL.
It states that the “contractor (GSPL) shall actively assist and ensure that EOT (Extension Of Timeline) is granted… without any penalty/LD (Late Deduction).”
GSPL, incorporated on March 27, 2019, was in existence for just over six months when it bagged the contract from Tata Projects Ltd on September 19, 2019.
A private firm headquartered in Raipur, the scope of work of the contractor, who were essentially providing manual skilled workers, included end-to-end connectivity digging trenches, laying down the infrastructure and “testing and establishing connectivity at GP (Gram Panchayat) and Block level.”
Asked to explain the penalty clause, GSPL’s Director Dheeraj Dubey said: “When we joined, Tata was already delayed and had been penalised. We were told that we had to work fast, or we would face a penalty too.” He said he did not remember the clause about ensuring EOT without any penalty.
One of the many sub-contractors, GSPL, according to Dubey, was given work on 27 blocks of 85 in Chhattisgarh and their work is close to 50 per cent near completion, he said.
While Tata Projects received a conditional 12-month extension of timeline on June 7, 2019, to be reviewed after three months, the SLIC confirmed it only at its meeting on October 21, 2019.
Unable to complete the project after the expiry of the first extension on June 17, 2020, Chhattisgarh Infotech Promotion Society (ChIPS) CEO Sameer Vishnoi, following a request by Tata Projects, extended the timeline by another six months to December 2020. ChIPS is the state’s nodal agency to monitor the progress of IT projects including BharatNet Phase II.
As on September 25, 2020, Tata Projects could ensure broadband-ready infrastructure in only 1,394 gram panchayats (24 per cent of the target).
When contacted, ChIPS CEO Sameer Vishnoi told The Indian Express that ChIPS was not aware of any such contract. “As ChIPS is not holding any such document or details of matter, so it would not be possible to comment whether it is proper or valid.”
Responding to questions, a spokesperson for Tata Projects said “the promoters of the sub-contractor (which is set up as a special purpose vehicle) are long established local contractor companies with considerable relevant experience.” About the particular clause in its agreement with GSPL, Tata Projects said it related to “contracted work being completed in an accelerated manner so as to ensure no punitive action arises.”
Tata Projects as well as ChIPS, in a separate statement, also said the government had more than Rs 332 crore as Performance Bank Guarantee and as Additional Bank Guarantee, which could be used for penalty at the end of the project.
In the statement, ChIPS said the newspaper’s report on Thursday that the penalty levied earlier was ratified by a Chief Secretary-led committee was misleading and erroneous. “CEO Sameer Vishnoi has started formal procedure of imposing of proposed penalty of 12 per cent of the project cost on contractor M/s Tata Projects Ltd. The show cause notice to Tata Projects Ltd has already been issued on 29/8/2020 and further action is under process,” it said.
The Indian Express has, however, seen the contents of the letter of ChIPS under earlier CEO KC Devasenapathi in February 2019 and the minutes of the SLIC meetings in June 2019 and October 2019 chaired by then Chief Secretary, which clearly mention that the penalty was levied and ratified. Further, those who worked on this project earlier said, that while the performance bank guarantee of Tata is with the state, it is only 10 per cent of the actual cost as opposed to 12 per cent penalty.
A former employee of CHiPS said, “TPL had been paid 100 per cent money as advance capital against the Additional Bank Guarantee. Moreover, without information to all parties involved a proportionate deduction can’t be changed into a deduction at completion. The ABG and PBG are standard practices which shouldn’t be confused with penalty.”
Issuing the work order to GSPL, Tata Projects described GSPL as “having expertise in delay analysis and assessment” in the specific conditions of contract.
The Raipur-based company, with a paid-up capital of Rs 8 lakh, has three directors Dubey, Dinesh Patel and KB Varsani. Varsani owns a construction and civil engineering firm that has been in existence since 2006, in which Dubey became a partner in 2020.
Dubey is one of the founders of Dee Vee Projects Ltd, an infrastructure firm incorporated in 2012 and co-owned by Vivek Ranjan Mahto, son of late BJP leader Banshilal Mahto, where Patel is also a co-director.
Even before the first penalty was levied on Tata Projects in November 2018, two out of the three firms Tata had sub-contracted initially had no experience and even shared a director, an official involved in the project said. “Before levying the first penalty, the concerned authorities with the state government had raised had raised the issue about their sub-vendors. But since Tata Projects had complete freedom, it went ahead with those contractors, but didn’t deliver as per the timeline,” the official said, requesting anonymity.
Payments to Tata Projects also gained momentum in 2020. Red flags were raised internally in ChIPS about discrepancy in information on the quantum of work completed based on which funds were released.
For instance, one letter dated June 21, 2020, states work was completed in 604 villages, and another one issued on the same date states work was completed in 134 villages.
Records accessed by The Indian Express how that a junior officer in CHiPS had pointed this out. The officer said that the first letter was for release of funds and the second one “(was) not in alignment with the information forwarded to BBNL (Bharat Broadband Network Ltd).” Despite this, ChIPS CEO Vishnoi, signed the note-sheet without any comments or action.
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