Odisha Government Suffers Rs 76.38 Crore Revenue Loss Due to PWD's Failure to Penalize Defaulting Contractors
The Comptroller and Auditor General (CAG) has exposed a significant financial lapse in Odisha, revealing that the state government incurred a substantial revenue loss of Rs 76.38 crore. This loss stemmed directly from the Public Works Department's failure to impose mandatory liquidated damages on contractors who delayed critical infrastructure projects. The damning findings were detailed in the latest CAG report, which was formally tabled in the state assembly on Tuesday, highlighting systemic failures in contract enforcement and financial accountability.
Massive Delays in Road and Bridge Projects Without Penalties
According to the comprehensive audit report, contractors responsible for 95 separate road and bridge projects caused extensive delays, with time overruns ranging from a modest 18 days to an astonishing 1,609 days. Despite clear and explicit provisions within the contract agreements that authorized the department to recover financial penalties for these time extensions, no such penalties were levied. The audit meticulously noted that the affected projects were awarded between August 2018 and March 2023, representing a significant period of mismanagement.
The total estimated cost for these delayed initiatives was a staggering Rs 763.84 crore, with the actual agreement values set at Rs 693.51 crore. Alarmingly, an extra expenditure of Rs 385.97 crore had already been incurred on these projects, even though many remained incomplete as of November 2023. This combination of cost overruns and project delays paints a picture of severe inefficiency and lack of oversight.
Contractual Violations and Administrative Lapses
The CAG report underscored that, as per the standard conditions of contract, liquidated damages of up to 10% of the estimated project cost were supposed to be imposed for any delays beyond the stipulated completion period. "However, concerned superintending engineers neither issued any show-cause notices nor levied penalties," the audit observation stated bluntly. This represents a fundamental breakdown in administrative protocol and contract management.
In a particularly egregious finding, the CAG discovered that contractors did not even apply for an Extension of Time (EoT), which is a mandatory requirement under the Odisha Public Works Department Code for regularizing any delays. Despite this clear violation, no disciplinary or financial action was initiated by the department officials. Audit rules explicitly stipulate that penalties must be levied in cases where an EoT is neither formally sought nor officially granted, making the department's inaction even more indefensible.
Public Impact and Government Response
The prolonged delays have had a direct and negative impact on Odisha's citizens, depriving them of timely access to critical road and bridge infrastructure. This has adversely affected regional connectivity, economic activity, and overall public convenience. The report further indicated wide variation in project execution, with financial progress on the delayed projects ranging from 0% to 97%, despite the contractual timelines having long expired.
In its official response to the auditors, the state government reportedly stated that liquidated damages would be imposed after analyzing the reasons for the delays. However, the CAG firmly rejected this explanation, pointing out that no valid justification existed for withholding penalties when contractors had demonstrably failed to seek the required EoT or complete the assigned works within the stipulated periods. This rebuttal highlights a gap between procedural promises and actual enforcement.
Audit Recommendations for Future Accountability
The CAG has issued strong recommendations to prevent a recurrence of such financial lapses. The audit body advised that the Public Works Department must strictly enforce all agreement clauses in future contracts and impose penalties wherever project delays are unjustified. The report warned that repeated failures to do so could severely undermine financial discipline, erode public trust, and compromise accountability in government works. Ensuring robust contract management is now imperative for the department to safeguard state revenues and ensure timely project delivery for public benefit.
