Wednesday, January 28, 2009

Some Questions and Answers

Was the project done in undue haste?


  • The project was initiated disregarded the opinion of Central Electricity Authority (CEA ).

  • The fact that performance factors in these power houses improved from 4867 in 1981 to 4919 in 1994 was also ignored

  • This contract was signed ignoring the opinion of Balanandan committee . Mr Balanandan was a PB member of CPI(M) then. And more importantly he headed a 26 member committee of experts in this sector who were appointed by the same LDF Government to overcome the energy crisis here.

  • The deal with SNC Lavalin was finalized just 8 days after the Balanandan Committee submitted its report.

Was this undue haste an attempt to solve the power shortage in the state?


  • The reason cited for proceeding with such a contract was that the fair life period of machineries in these power stations were over. The aim was just replacement and not enhancement.

  • Balanandan committee had suggested just replacement of some parts and a new 40MW power station as “ the most important short time measure ..” for the power crisis. This was completely ignored which clearly proves that resolving power shortage was not a consideration at all

In this undue haste, were procedures followed (by LDF Govt)?

NO. Instead they were deliberately bypassed.

  • To bypass the condition that any contract above 100 crores should be approved by the CEA, the project was divided into three.

  • The reasonability of the prices should have been ensured with NHPC (National Hydro Power Corporation) . This was not done. After signing the contract and failing in an attempt to get the price ratified by a subcommittee within KSEB itself, NHPC was asked to verify the reasonability of the price. But NHPC was not furnished with the necessary specification even after repeated reminders.

  • Like in the case of Bofors, in which we alleged that there were middlemen, here the supply project itself was signed with middlemen. SNC Lavalin is not a manufacturer but only a consultant. Their commission (for buying and supplying machines from the manufacturer) itself cost us huge money.

Was Pinarayi and the LDF ministry bound by the UDF agreement with SNC Lavalin?

The UDF agreement was only for a consultancy(limited in scope, compared with LDF contract) . That didn’t require that we should have followed whatever the consultant suggests.

Were tenders called? Was tendering possible?

  • The consultancy agreement suggested that we can avail loans from Export Development Corporation (EDC) of Canada. It was not mandatory that we should have availed it.

  • But even if we decide to avail EDC loan, we could have issued a tender which satisfy the loan conditions. This was clearly specified in the consultancy agreement.

  • There was absolutely no issue in issuing a tender within Canada – even if it was decided that we will accept loan with conditions.

  • No one asked us or forced us to give the supply agreement to a consultant middleman. The argument that the supply agreement should have been given to SNC Lavalin itself, is simply a lie.

Was this contract signed with cabinet approval?


The deal was signed on Feb 10, 1997. The cabinet approved this project only on March 3, 1998. But here also the cabinet note was clearly misleading and said that 25 million Canadian dollars will be given for a Cancer Treatment Center.

The reasonability of the price was not checked with NHPC before signing the contract. But when it was checked later , did we find the price reasonable?


First of all the technical specification of the machines were not provided to NHPC despite repeated request. NHPC in its report sent to the Board on Nov 19, 1997 clearly says that the reasonability of prices cannot be checked without technical specifications. It says rates of Canadian equipments are on the higher side than Indian equipments. But it also states that “ ..the rates offered by SNC-Lavalin INC can be comparable to international prices... Keeping in view the soft loan with GRANT ELEMENT”. But now the advocates of this deal ignores this part and says that NHPC had assured the reasonability of the prices. And now we know that the Grant was not received.

The second time Pinarayi visited Canada, the delegation was led by the then CM Nayanar. So was Pinarayi just following Nayanar?


  • The initial delegation was led by Pinarayi. In fact Nayanar being part of this should also be viewed as part of the conspiracy as now it is being brought out as if Nayanar is the main culprit.

  • After the VS ministry came to power, Nayanar’s neice Pushpa who was working with Sreemathy teacher’s office was asked to quit just because she went and enquired whether it is possible to get the further grant amount for Malabar Cancer Center.

  • No papers show any active role played by Shri Nayanar in this. Yet it is a pity that the slain leader is being brought in as a scapegoat.

Was Malabar Cancer Center part of the project?

Yes. There are at least four documents which clearly states so .

  • The first of these documents is the minutes relating to the visit to Canada of a high-level team from the State headed by Pinarayi Vijayan in October 1996. The minutes of this meeting says “they had also agreed to assist Kerala for putting up a most modern Cancer Institute in the Kuttiyadi project area". It further says “SLI [SNC-Lavalin] provide experts to study the feasibility, cost, schedule, etc, of such a facility, including possible sources of financing;” [ October 12-29, 1996]

  • Then SNC Lavalin sends a detailed project report with a covering letter to the power secratery with a copy to the KSEB secretary. The letter signed by Klaus Trendl, vice president of SNC says “pleased to confirm that the Malabar Cancer Centre project is directly connected to the Rehabilitation Project [Pallivasal-Sengulam-Panniar] and can be availed on the satisfactory conclusion of the loan agreement with the Export Development Corporation of Canada and the exporter SNC-Lavalin." The project report confirms that the cost is 103 crores and that the project will be completed in 2001.( The LDF ministry had time till May 2001)[Dec 23, 1997]

  • The Secretary KSEB writes to the Power Secretary describing the salient features of the R&M project. He says The unique feature of this proposal is the grant offered for setting up a Malabar Cancer Centre... (that) will have a total project cost of Rs. 103 crores (the grant element shown as Rs. 98 crores)." [Jan 22, 1998]

  • The Cabinet note circulated to the council of minsters said it was also decided that, in addition to the loan, CIDA and other Canadian agencies will give 25 million Canadian dollars as grant to build a cancer treatment centre." [March 3, 1998]

All these documents say that commitment to MCC was very much part of the Panniar-Sengulam- Pallivasal Project. At least as per official records.

How did SNC Lavalin get out of this? If they didn’t stick to their commitments why did the subsequent UDF government pay back the loan?

The commitment from SNC Lavalin for the Malabar Cancer center was never made a legally binding agreement. But the loan we availed from Export Development Corporation (EDC) had bound us legally with enough government/ Bank guarantee and we had no other option but to repay it.

Why was the commitment on Malabar Cancer center not made legally binding? Was it overlooked or is that a case of clear connivance?

IT IS A CASE OF CONNIVANCE. Why? Because this was not made a legal agreement despite being cautioned. The KSEB Secretary in his report to the Power Secretary dated Jan 22, 1998 says “Since the grant component is not coming directly to the KSEB, the State Government has to ensure that the promised grant for the Cancer Centre materialises. M/s EDC has imposed a number of normal conditions for availing the export credit, including Government/Bank guarantee for repayment of the loan and the interest thereon. It is necessary that the Government also binds SNC-Lavalin in some such agreements so as to ensure that the release of the grant for the Cancer Centre is done pari-passu with the rehabilitation projects.

Not only that it was ignored, any reference about such a caution failed to find mention in the cabinet note.

Why didn’t the UDF ministry renew the MOU? Why didn’t they make it a legally binding agreement?

There were 2 MOUs. One which ensured that we will avail and repay loan to EDC and that SNC Lavalin will get payments from this loan amount. The second MOU on SNC’s commitment to grant us 98 crores for the Cancer center. The first MOU was made a legally binding agreement where as the second MOU was not. Instead the second MOU was renewed for another 6 months.Then another 6 months.

By the time Mr Sharma took over as the power minister, SNC had backed off from their commitments as per the screenplay. On April 21,2001 , Sharma has noted in the file According to the Para 2(1) of the Draft Agreement, as per the Project report it is the seen that SLI (SNC-Lavalin) has only agreed to make all efforts for obtaining the full assistance for the project. This is a deviation from the clause in the Para 3(a) of the MOU that the full amount will be provided for the project. In this context, steps should be taken to enter into an Agreement in the time frame of the MOU by making necessary amendments, according to the clause 3(a) MOU to ensure that SLI provides the full amount

So there is no point blaming anyone else who followed for not making a legally binding agreement.

About renewing the MOU, why should SNC Lavalin renew the MOU after they have obtained the full amount for the R & M Project ?

The LDF Government could get 12 crores from them. But UDF government couldn’t get a peny. Why?

  • The Cancer Center Project was to be over by 2001. That means the LDF ministry was supposed to get the whole 98 crores before 2001. But could get only 1/10th of the amount.

  • The KSEB secretary had warned that we should ensure that the release of the grant for the Cancer Centre is done pari-passu with the rehabilitation projects." But we never bothered.

  • Nor was there any legally binding agreement with which we could have forced them.

Why didn’t Antony send an appreciation letter as asked by them?

Such a letter was sent. But it is absurd asking why our CM didn’t beg after allowing them to get out without making them legally binding.

Did SNC Lavalin cheat us or did some of our leaders steal the money?

Let us ponder rather than being hasty. What is very clear and beyond doubt is that we were fooled.

Our leaders didn’t do this by mistake. This is clear as they were cautioned by officials but those officials were abused.

If our leader just acted so that others can rob us without getting his adequate share he is not just a thief but a fool also.

SNC had informed the state officially that they have 26 crores which they got from CIDA, ready to be distributed to the state by a letter. But it seems only 8 crores reached us. Even if the story is that CIDA backed off from their commitments,Where did this 18 crore go?

The deal is between KSEB and SNC Lavalin. How can individuals take money from here?

The deal was between KSEB and SNC Lavalin. How can KSEB have a cancer hospital? Lets leave this for now.

A Society named Malabar Cancer Center Society(MCCS) with Chief Minister as its chairman was constituted to run the hospital. An account for MCCS was initiated by paying Rs 300/- It was expected that money for the hospital will come to this account. But not another paisa came into that account ever.

Instead in the second meeting of the MCCS, a firm named Technicalia attends the meeting. And they start construction of the hospital. It was told that they were receiving money directly from SNC Lavalin.

How did Technicalia attend the MCCS meeting? Who invited them?

It is a mystery. This is a project under the power department of the state. There was a separate society formed exclusively for this project. This cancer center was a 103 crore project. We should have issued a tender to decide who will do this project. Instead we awarded it to a so-called firm in Chennai. Money is disbursed from Canada honoring an MOU between KSEB and SNC Lavalin. But when it reaches India, it is neither going to KSEB account nor to the MCCS account but to some other account (Technicalia’s? May be). Without asking for payment from anyone Technicalia constructs and when the loan component was repaid by KSEB , they just stop construction. HowZAT ?

Is it that we were denied of what was offered to us or did we actually incur more money?

We ended up spending much more.

  • The total renovation was not at all necessary. But we went ahead with it.

  • The enhancement which would have ensured additional power supply was not done.

  • Machines which were fully functional and which would have functioned effectively were unnecessarily replaced. At the most some replacement of parts were the only thing required. (As suggested by all experts).

  • These machines were replaced by faulty machines. (CAG report).

  • The reasonability of the prices were not ensured before the contract was signed.

  • BHEL was ready to do the projects at less than 100 crores .

  • Without the Grant element the rates were really exhorbitant.

  • And the grant component was eaten by somebody else.


Was there a project report submitted by SNC Lavalin to the QUBEC government?

Yes. But in this project report the total cost of the cancer center was shown as only approx 26 crores. This report was sent to the Kerala government by their high commissioner when Aryadan Mohammed wrote to him. Does this mean the hyped Cancer center project report was a ploy by Pinarayi and SNC to fool Kerala, ensure that the middlemen SNC gets the deal at a much higher rate? Was Technicaliya brought in so that the hospital project is delayed till they get their money and then desert it?


  • The agreement says that we will be governed by the rules of Ontario province. When Finance/Law departments questioned this they were silenced by Pinarayi.

  • It was agreed that KSEB will be registered as a company and says KSEB will be adapted and restructured “ to the new policy for generation, power production by private players”. The ministerial delegations minutes shows that a project called Kerala Enrgy Infrastructure Services Project (KEISP) was initiated for the same there.


  1. Fantastic work. At least some of the keralites
    will come to know the truth ratherv than the
    rotten politics to hide up the fishy deal.
    Who ever doing this job is not layman but I hope someone who knew all detais. May God bless you
    Dont pull behind. We are with You.
    Is it possible to do some thing in malayalam
    for the common people ?

  2. Really a surprise for us, all the while we thought that CPM is not corrupted now we can see the real face. They are making "Pothujanam Kazhutha's" What to do? We have to bear it.....
    Jai Hind

  3. CPI(M) used to be the party of the poor and now they are investing in Hotel, Theme park and Exclusive private clubs with annual membership fee of more than Rs.100,000.00.Where is the funding for all these investments coming from.
    Vijayan build a multi crore house. As far as I know the only job he ever held was the Minister ship during Nayanar ministry and now he has his kids studying abroad. I am sure with the salary he is getting for being the secrtary of CPI(M) is not paying for all these expenses. So in conclusion if you put two and two together we can see why Pinarai and CPI(M) are trying to hide behind the wale.

  4. what a way of presenting facts onesidedly.A person of wisdom can easily realise that the original intension of this presentation is to point fingures blindly in one direction rather than present the full facts in an impartial manner.dissappointing to people like me who where looking for some place from where we could get the full facts impartially.

  5. All the answers are totally baseless and ridiculous, the author's aim is to tarnish, discolor and taint Vijayan’s image, and most importantly to elude the real-culprits, Mr. Karthikeyan,Mr.Kadavoor Sivadasan, Mr.Aryadan Mohammed and Mr. A.K Antony who has started the deal with SNC Lavllin. Some of these names did appear in the initial Vigilance report, but not surprising these names are not in the CBI report. The timing and the unwarranted haste in which the CBI report was submitted only adds fuel to the public suspicion of the conspiracy behind this politically motivated move by CBI.
    But for the common man in Kerala, Vijayan will be remembered as the most efficient and competent power minister, who has made their life easier by relieving them from almost 6-8 hours of daily power cuts and acute power shortages in the late 90’s and made kerala a power-surplus state in 2000. Most importantly for the people of Malabar, they are appreciative and grateful to Vijayan in that even in those troubled times of economic crisis, he hasn’t forgotten thousands of cancer patients in Malabar by getting help from SNC Lavlin for a cancer hospital in Thalassery and including this project in the deal with SNC-Lavlin. If completed, it would have been another major cancer institiute , but sadly even now the cancer patients of Malabar are depended on Regional Cancer Center, Thiruvananthapuram.
    I myself have taken the SSLC during the same period when Vijayan was the power minister, for the first time during my schooling, there was uninterrupted power supply and the brightness with which the lights were glowing still excites me. I have no doubt that for the thousands who has experienced the change which Vijayan has brought to the power sector , this report and the related polarizing in kerala politics will only reinforce their faith, loyalty and confidence on their undisputed leader, Pinaryi Vijayan.

  6. This is a brilliant work,absolutely brilliant.

  7. Dear "anonymous",if you have any intention of framing Mr.Vijayan as a clean,correct and transparent leader,please write and support with such articles in"desabhimani" or "chintha" not here.Here let we people beleives in rule of law and democracy and stands for righthoodness spent our words here as we dont have such other alternatives.

  8. From the begginning the deal KSEB and SNC-Lavalin was dubious. Initially it was plotted by UDF ministers and Pinaray utilized the chance later. Pinaray had time to cancel the deal since the deal was not in effect even after he became the minister. The arguments about the arbitration in Paris is baseless. The deal clearly states that the contract will be governmed by the laws of India.

  9. The above supporting article is only spreading sensation about the cancer center. Using that sensation just justifying Vijayan. Describing Pinaray as a miracle man to give electricity 24 hours also a pretext for that. How he brought the electricity generated that time to supply 24 hours? Is it that after the execution of the SNC-Lavalin contract? How many years Pinaray stayed as electricity minister? Is it only until Chadayan Govindan's death and he became party secretary. Come with evidence and prove that the deal not signed at the time of Pinaray and the consultancy contract converted to a supply contract. Dear friend who supports Pinaray must understand that SNC-Lavalin not manufacturing power generating sets. SNC-Lavalin is a corporate company operating in French spoken province of Canadan called Quebec a former french colony. The companies operating in this province got support from French companies also. SNC-Lavalin is middleman and the equipment for KSEB supplied by Alstom a French company. Why KSEB not signed the deal directly with Alstom? Why KSEB gave a consultancy contract to SNC-Lavalin? We do not have engineers and consultants in KSEB to make technical documents for tender and supervise the contracts? A government committed to people always try to reduce the cost. At the time of Pinaray the equipment at those sites were not at that bad state to replace. They were still running and producing power.

  10. Who is this Technicalia?
    The Desabnhimani daily Reports while going through the web site of technicalia we could see they were very relevent cunsultants in medical field.Desabhimani states that in the web site of technicalia( were involved inthe constraction of Pariyaram Medical college.
    I searched and searched, always all search engine.can't findout 'TECNICALIA'
    can any one help ?

  11. You have misspelt. It is