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A performance audit by the Comptroller and Auditor General of India has identified unwarranted expenditure of Rs 297.97 crore in road projects executed in Maharashtra under the Hybrid Annuity Model (HAM). The audit, presented in the Maharashtra Legislative Assembly, examined projects implemented between 2018-19 and 2022-23. It highlighted issues in detailed project reports, incorrect cost estimations, delays in payments, and weak monitoring mechanisms. The report also pointed to excess insurance-related costs, procedural lapses, and instances where works began without required clearances, while also noting improved connectivity on certain road stretches.
The Comptroller and Auditor General of India has reported unwarranted expenditure of Rs 297.97 crore in road development projects carried out in Maharashtra under the Hybrid Annuity Model (HAM), as per a performance audit presented in the Maharashtra Legislative Assembly earlier this week. Advertisement
The audit covered road improvement works implemented between 2018-19 and 2022-23. Under HAM, the government funds a portion of the project during construction while the remaining cost is borne by private developers, who are later repaid through fixed annuity payments over time.
As per the report, the state government had, in November 2017, planned to upgrade 10,576 km of roads out of a total network of 90,608 km under HAM, with an estimated investment of Rs 30,000 crore. The funding structure included 60 per cent government equity amounting to Rs 18,000 crore and 40 per cent private equity of Rs 12,000 crore.
The audit observed that the specification of crust thickness for flexible pavement exceeded what was required based on projected Million Standard Axles (MSA) in Detailed Project Reports (DPRs). This mismatch was identified as a key reason behind the unwarranted expenditure of Rs 297.97 crore.
It also pointed out shortcomings in the preparation of DPRs, including lump-sum provisions for utility shifting without detailed component-wise estimation and the inclusion of an incorrect clause in the Request for Proposal (RFP) for DPR consultants. These issues contributed to avoidable costs.
According to the report, 78 DPRs covering 195 works were prepared at a cost of Rs 217.40 crore. This included an unnecessary allocation of Rs 5.55 crore for land acquisition activities that were ultimately not undertaken.
The audit further highlighted delays in milestone-linked and annuity payments in three out of 42 selected HAM packages due to delayed fund releases by the government. These delays resulted in additional interest payments of Rs 4.65 crore to concessionaires.
Instances of excess payments were also noted, attributed to incorrect computation of completion costs, short adjustments of payments made during construction, and the application of incorrect interest rates.
Another concern raised was the unrealistic estimation of insurance costs within Operation and Maintenance (O&M) expenses. In 17 out of 42 packages, this led to an excess burden of Rs 34.56 crore. Insurance provisions were calculated at 0.15 per cent of estimated project cost rather than actual premium values. While concessionaires paid annual premiums ranging between Rs 0.50 lakh and Rs 9.07 lakh, the provisions allocated ranged from Rs 10.34 lakh to Rs 46.13 lakh. Additionally, a fixed annual provision of Rs 10 lakh was made for patrolling expenses irrespective of road length.
The audit also observed that certain works in three packages commenced without obtaining mandatory forest clearances, resulting in either de-scoping or non-execution. In a few cases, road usage remained incomplete due to issues such as unaddressed narrow minor bridges, reconstruction of weak bridges, and unfinished bridge stretches.
Monitoring and supervision gaps were also identified. These included insufficient inspections by Vigilance and Quality Control Circles, absence of defined inspection targets at various engineering levels, and delays in appointing independent engineers and safety consultants across multiple packages. Independent engineers were not appointed during the Operation and Maintenance phase.
Further irregularities included delays in submission of performance security, execution of escrow agreements, and achievement of physical progress milestones. The audit also recorded instances of inadequate maintenance during joint inspections.
Despite these issues, the report acknowledged that certain road stretches under HAM contributed to improved connectivity. Travel time for the Ashta-vinayak pilgrimage route covering 606 km reportedly reduced from two to three days to around 13 hours and 30 minutes following completion of select packages.
Source PTI
FAQ
Q1: What has the CAG flagged in Maharashtra road projects?
Comptroller and Auditor General of India has flagged unwarranted expenditure of Rs 297.97 crore in road projects executed in Maharashtra under the Hybrid Annuity Model (HAM), based on a performance audit presented to the state legislature.
Q2: What is the Hybrid Annuity Model (HAM)?
Under the HAM model, the government funds a portion of the project during construction while the remaining cost is borne by private developers, who are later repaid through fixed annuity payments over a period of time.
Q3: Which period and projects were covered in the audit?
The audit examined road projects implemented between 2018-19 and 2022-23, covering multiple HAM packages and assessing planning, execution, cost estimation, and monitoring aspects of these works.
Q4: What were the main reasons for excess expenditure?
The audit pointed to issues such as incorrect cost estimation in Detailed Project Reports (DPRs), excessive pavement thickness beyond requirements, procedural lapses, unrealistic provisions, and weak oversight mechanisms as key factors behind the unwarranted spending.
Q5: Were there delays or financial impacts due to payment issues?
Yes, delays in government fund releases led to delays in milestone-linked and annuity payments in some packages, resulting in additional interest costs of Rs 4.65 crore being paid to concessionaires.
Q6: What irregularities were found in insurance and maintenance costs?
The audit observed that insurance costs were overestimated in several packages, leading to an excess burden of Rs 34.56 crore, along with fixed and unrealistic provisions for patrolling and maintenance expenses regardless of actual requirements.
Q7: Were there any issues related to approvals and project execution?
Yes, the audit noted that some works began without mandatory forest clearances, along with gaps in monitoring, delays in appointing independent engineers, and incomplete infrastructure in certain stretches, although some road segments did improve connectivity significantly.
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