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Gross Violations In World Bank Water Project Tendering Project In Shimla

Shimla, 14 October, 2022. We (Sanjay Chauhan and Tikender Singh Panwar, ex-Mayor and Deputy Mayor of Shimla, respectively) would like to highlight some of the gross irregularities being committed in the ongoing World Bank water project in Shimla in the state of Himachal Pradesh. The whole purpose of providing potable water to the residents of the Shimla planning area stands defeated with this project if things are not rectified soon.

We would like you to intervene in the matter and ensure that the current bid for the performance-based contract is withdrawn immediately and fresh bids are sought following the law of the land.

This is what we would like to state:

  • We were instrumental in getting the World Bank water project for the Shimla planning area. A tripartite agreement took place between the World Bank, the Himachal Pradesh state government and the Shimla Municipal Corporation that we were leading in the year 2016.
  • Shimla Jal Prabandan Nigam Limited published a tender “Performance Based Contract for Implementation of Continuous Pressurized Water Supply” for Shimla on July 27, 2022. The estimated value of the tender, excluding O& M, was Rs 442 crore.
  • Two firms submitted the bid on September 27, 2022, and on the same day, technical bids were opened by the department. On October 1, 2022, the urban development department declared both firms qualified. The financial bid of both firms was opened on October 6, 2022.
  • The SJPNL declared the result of the technical evaluation within four days, without giving access to bidders, which is totally against the process.
  • The lowest bidder’s price, including Capex (Capital Expenditure) and O&M (Operation and Maintenance) costs, is nearly 33% higher than the department’s estimate of the project value.
  • As per the office memorandum of the government of Himachal Pradesh dated January 10, 2020, one of the distinguished clauses mentioned at point number 5 highlights that “The ultimate objective of the tendering exercise is to encourage competition and reduce cost, it further states that low participation in the 1st call, i.e., two or less tenderers, tenders should be re-called”.
  • It is pertinent here to mention that, under an open bidding process, bidders get access to check the competitors’ documents and report any shortcomings, if found. However, neither was this allowed by the department nor sought by the bidders, leading to speculation of cartelisation. The department has not even shared the price bid with the respective bidders, thus taking the outcome for granted. No tender in the country has been decided in such a short span of time.
  • Hence, awarding of the tender at this stage in such a hurry at the 1st call at such a high cost and in violation of the norms set by the Himachal Pradesh government itself is extremely unjustified and would be a heavy loss to the project, which is funded by the World Bank and the people of the state.
  • The terms, values, and scope of work of this tender were different than the previous one and it qualifies to be the first call.
  • On October 7, 2022, the above facts were also brought to the notice of the Chief Secretary of the State.

What is the difference in cost?

  • The estimated cost by the department, including Capex and O&M, was around Rs 592 crore, whereas the cost that the project will have to bear, as quoted by the lowest bidder, would be to the tune of Rs 786 crore approximately. Thus, it will be a straight loss of around Rs 200 crore. It also has to be mentioned that the department has not negotiated with the L1 bidder despite such a huge difference between the quoted price and the estimated price.
  • The current bidding process also smacks of cartelisation, as in a tender of such a high value, the difference after calculating NPV is just Rs 10 crore between the bidders. The NPV value of L & T is Rs 693 crore and that of Suez is Rs 683 crore, the L1 bidder.
  • The tender was floated on July 27, 2022, and the government is trying to award the tender by ignoring the process and the norms laid out in World Bank tenders.
  • The consultants, it seems, are not erudite enough to ensure the proper process and due diligence required in the execution of such tender processes and undermining the technicalities and transparency.

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