Mayor panel extends over Rs200cr favour to OCW

Nagpur: The board of Nagpur Environmental Services Limited (NESL) headed by mayor Nanda Jichkar has allowed relaxation of financial and performance conditions in agreement between Nagpur Municipal Corporation (NMC) and water operator Orange City Water Pvt Ltd (OCW). The move is likely to result in a loss of over Rs200 crore to NMC and benefit OCW.
NESL board also decided to extend completion period of 24x7 Water Supply Project by five years up to March 1, 2022.CM Devendra Fadnavis had announced in the state assembly during budget session that the project would be completed by December this year. This means all parts of city will not get 24x7 water supply for at least next three and a half years. OCW was supposed to complete the project by March 1, 2017.
NESL board took all these decisions in the meeting held on May 2. Jichkar confirmed the decisions taken by the board by signing the minutes of the meeting on May 16. TOI is having a copy of the minutes with it. NESL will now put the decisions before standing committee followed by general body for implementation.
All top office bearers including ruling party leader Sandip Joshi, standing committee chairman Virendra Kukreja, chairman of water works consultative committee Vijay Zalke were present in the meeting. Even leader of opposition Tanaji Wanve was present. The then municipal commissioner Ashwin Mudgal, executive director Sanjay Gaikwad and director Shashikant Hastak were also present.
NESL board resolved, “Obligation of R&R (renewal and replacement) expenditure is effective from current year i.e. 2018-19 in place of commencement date.” As per the agreement executed in 2011, it was mandatory for OCW to spend Rs15 crore per annum on R&R works from its own kitty. This condition was applicable from commencement date i.e. March 1, 2012. And, the amount was supposed to increase with hike in payment to OCW.
NMC had hiked OCW payment by 10% in 2012-13, 17% in 2013-14, 21% in 2014-15, 32% in 2015-16, 36% in 2016-17 and the same continued in 2017-18. Thus, R&R expenditure increased to Rs16.50 crore, Rs17.55 crore, Rs18.15 crore, Rs19.80 crore, Rs20.40 crore and continued at Rs20.40 crore in corresponding fiscals.
As per NESL decision, OCW saved Rs112.80 crore on R&R if effective date is revised to 2018-19. As per NESL data, OCW did not spend a single penny in last six years despite several reminders from NESL. It effectively means a Rs112.80 crore waiver on amount that was supposed to be spent on repairing and replacement of water pipelines, valves and other infrastructure.
NESL also resolved, “All the actions taken against operator since commencement date (March 1, 2012) till date to be reversed.” Following violations of agreement and lack of performance, NESL used to deduct 10% of total payment of OCW every month. Between March 1, 2012, and October 30, 2018, the OCW’s payment counts to Rs615 crore. 10% of payment means Rs61.50 crore. The amount will increase if effective date is finalized after general body’s approval.
NESL board took four more decisions that are likely to result into a loss of over Rs30 crore to NMC and benefit to OCW (See graphic). Also, NESL also decided not to make new deductions/penalties on OCW or serve notices to OCW till approval of decisions by competent authority.
Jichkar said, “No, this is not true. In the said meeting, OCW made a presentation before the board about difficulties faced in implementation of the project and resulting in losses to OCW. After discussing the reasons of delay, the board in principle accepted to grant five years extension to O&M obligations subject to no change in total contract period and no change in ultimate efficiency targets. Further, the board directed OCW to submit detailed financial proposal for approval of competent authority of NMC,” she said.
OCW spokesperson said, “Thanks to NESL that they have taken decision based on OCW’s performance that has till date brought water prosperity in city.”
Wanve said he was late to the meeting and did not accept any such decisions. “Instead, I slammed the OCW for delay in completing the project,” he said.
Congress corporator Praful Gudadhe said NESL decision was a big irregularity. “Tendering process was done on the basis of all these parameters. These cannot be changed. Instead, NMC should levy penalty on OCW for not spending on R&R for over last six years. Already, the agreement was slanted towards OCW which was exposed by us, activists and accountant general’s audit report. More favours to OCW will not be tolerated,” he said.
Similarly, many financial and performance parameters in agreement between the NMC and Starbus operator VNIL were revised that resulted Starbus scam. The state government is conducting an inquiry into it through divisional commissioner.