Friday, January 30, 2009

Study reports on SNC Lavalin -academic work

KSEB contract for SNC-Lavalin Malabar Cancer Centre or kick-back?
By K Vijayachandran

In view, there were three fundamental defects in the agreement signed by the KSEB under the UDF regime: (1) the price agreed to for the supply of goods and services was quite high, considering the scope of the R&A programme; (2) contracting the consulting firm for the supply of goods and services, specified by it, was procedurally wrong and lacking in transparency and (3) the need for external consultancy was only marginal and most of the engineering services could be organized internally within the KSEB organization. Mr Sambamurthy had conveyed the above understanding to the KSEB Chairman, the Vice- Chairman of the Planning Board, as well as the Minister. We had also used our influence, individually as well as jointly, to get from BHEL its proposals and quotation to do the job on a turnkey basis with or without credit from the Power Finance Corporation. As I remember, BHEL's price was around Rs 100 crore, much less than that of the Canadian firm.


Mr Sambamurthy(Ex-CEA Chairman) had later informed me that the Minister himself was favouring the Canadians because they had offered to set up a Cancer Centre in the Chief Minister's constituency in Malabar at a cost of Rs 100 crore. Trading a misconceived power project contract for a healthcare institution in the Chief Minister's constituency was a new experience for Mr Sambamurthy and in his view it was a clear violation of the spirit of the Electricity Act 1948, of which he had been the custodian for several years. He had cautioned that it was nothing short of political corruption which would get exposed in no time and could do immense damage to the movement that we all believed in. Mr Varadachary, IAS, a close friend of mine and then Power Secretary, had told me that for expressing such concerns on the file the Minister had openly branded him a madcap.
Who was supposed to pay for the MCC, by what instrument, when and for what purpose? If already Rs 11 crore was paid as reported by The Hindu; who paid it, who received it, who spent it and who has accounted for it? MCC is a Government organization with the Chief Minister as Chairman.

A Study of the Indian Power Sector
K. P. Kannan and N. Vijayamohanan Pillai

It is worth mentioning that even while being under the clouds of a corruption case, the very same foreign contractor was awarded the modernisation works of 3 old hydropower plants, viz., Pallivasal, Panniar and Sengulam, and that too through a MoU only, without calling for international tenders as per guidelines! Current estimates put the costs of such modernisation works at Rs. 1.25 crores per MW, whereas the contract to SNC was given at a cost of Rs. 2.42 crores a MW (Rs. 280.5 crores for 115.5 MW of the three plants) (Malayala Manorama daily 7 February 2001). Assuming the validity of these estimates, a new hydro-plant of more than 110 MW could be constructed at this cost!

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