CAG Uncovers Widespread Tender Violations in Karnataka's Ambitious Water Project
The Comptroller and Auditor General of India has raised serious concerns regarding the tendering process for the Karnataka Government's ambitious Yettinahole Integrated Drinking Water Project. In a report tabled in the Assembly, the CAG highlighted multiple deficiencies and deviations from established norms that have marred this critical infrastructure initiative.
Major Deficiencies in the Tendering Process
The CAG audit has identified several critical shortcomings in how contracts were awarded for this massive project. These include:
- Non-adoption of standard tender documents for the majority of works
- Complete absence of bid capacity assessment for contractors
- Insufficient bidding time for high-value contracts ranging from Rs 87.08 crore to Rs 1,135.03 crore
According to the report, "It was observed that 44 works (out of 55), i.e., 80 per cent of the works, were awarded without evaluation of their capacity in respect of financial capability, bid capacity, work experience, etc." This represents a significant departure from standard procurement practices.
Alarming Scale of Non-Compliance
The scale of these violations is particularly concerning. Out of 44 works where standard tender documents were not adopted, 43 works costing Rs 16,807.31 crore were awarded to contractors without any assessment of their bid capacity. The CAG noted that this non-assessment risked entrusting works without obtaining reasonable assurance that contractors could successfully execute them.
Even more troubling is the concentration of contracts among a few contractors. The report reveals that works costing Rs 14,805 crore were awarded to only seven contractors, raising questions about competitive bidding and fair distribution of project components.
Government Response Rejected by CAG
When confronted with these findings, the Karnataka Neeravari Nigam Limited/Visvesvaraya Jala Nigam Limited responded in March 2024 that bid capacity conditions were relaxed to encourage more bidders. However, the CAG firmly rejected this justification, stating that "Reply is not acceptable as KNNL/VJNL awarded major chunks of the works without assessing bid capacity in violation of Government orders."
Specific Instance of Fraudulent Documentation
The CAG report also details a specific incident from July 2017 where a contractor uploaded fake work completion documents while submitting tenders for package four of the project's Phase 1. Despite this fraudulent activity, VJNL neither blacklisted the contractor nor forfeited his earnest money deposit of Rs 3.92 crore. Although the contractor did not ultimately secure the contracts, the tender was processed considering the agency as one of the eligible bidders.
Additional Financial Irregularities Identified
Beyond the tendering issues, the CAG has highlighted several other financial concerns, including:
- Irregular payments to contractors
- Excess and unjustified expenditure
- Other procedural violations in project implementation
Project Background and Significance
The Yettinahole Integrated Drinking Water Project represents one of Karnataka's most ambitious infrastructure initiatives, with an estimated cost of approximately Rs 23,251 crore. The project involves diverting the west-flowing Yettinahole stream from Sakleshpur in Hassan district to the water-scarce regions of Kolar and Chikkaballapur districts.
The first phase of this critical water supply project was inaugurated in September 2024, with the entire project expected to be completed by the end of 2027. Given its scale and importance for addressing water scarcity in drought-prone regions, the CAG's findings about procedural violations raise significant concerns about project governance and financial management.
These audit observations come at a crucial time as the project moves toward its completion deadline, highlighting the need for greater transparency and adherence to established norms in large-scale public infrastructure projects.
