India - Godavari Barrage Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4000 PROJECT PERFORMANCE AUDIT REPORT INDIA - GODAVARI BARRAGE PROJECT (CREDIT 532-IN) June 21, 1982 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS AND ACRONYMS GOAP - Government of Andhra Pradesh GOI - Government of India ICB - International Competitive Bidding IDA - International Development Association LCB - Local Competitive Bidding FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT INDIA - GODAVARI BARRAGE PROJECT (CREDIT 532-IN) TABLE OF CONTENTS Page No. Preface ............................................................i..... Basic Data Sheet ....................................................... ii Highlights ..... ................................................... iv PROJECT PERFORMANCE AUDIT MEMORANDUM I. SUMMARY ................................................... 1 II. ISSUES ................................................... 2 A. International Competitive Bidding (ICB) for Civil Works .................................. 3 B. Supervision ...................................... 5 Attachment I: Borrower's Comments .................................... 6 Attachment II: Borrower's Comments .................................... 8 PROJECT COMPLETION REPORT I. SECTOR SETTING ....................................... 17 II. FORMULATION .......................................... 17 The Existing Weir........................... ............... 17 Preparation, Appraisal and Agreement......... ........... 18 The Project............................... ............... 19 Project Design ........................... ............ 19 Engineering Design........................... .......... 20 Implementation Schedule............................ ......20 Cost Estimates............................. . ........... 20 Engineering Implications of Failure (as visualized at appraisal) ........ ......... .21 Agricultural Implications with Failure (as visualized at appraisal) ........................ 22 Pre-Appraisal Construction Progress ............... ...... 22 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. TABLE OF CONTENTS (Continued) Page No. III. IMPLEMENTATION ..................................... 23 The Issues at Negotiations ................................... 23 Conditions of Effectiveness .................................. 24 Start-Up .................................................... 24 Bidding Experience on Civil Works Procurement ........... 25 Bidding Experience on the Gates .............................. 27 Construction Problems ....................................... 28 Failure of Dowlaiswaram Anicut ........................... 28 Pumping Water into the Eastern Canal .................. 30 Quarry Channel ........................................... 30 Collapse of Cofferdam ..................................... 30 Construction Progress ....................................... 30 Appointment of a Negotiating Committee .................. 34 Failure to Allow for Local Competitive Bidding .......... 34 Implications of the Delay in Completion of Project ...... 35 Quality of Construction ...................................... 35 Project Coordination ........................................ 36 Construction Costs .......................................... 36 Disbursements .............................................. 36 Compliance with Credit Covenants ........................... 37 The Bank's Performance ...................................... 40 Project Benefits and Economic Analysis ................... 40 SUPPORTING TABLES Table 1 - Maximum Flood Discharge at Godavari Barrage - 1975 to 1980 Table 2 - Project Cost Estimates and Expenditures Table 3 - Quantities of Materials Used in Construction Table 4 - Disbursements during Project Period Table 5 - Cost and Benefit Streams for Economic Analysis LIST OF ANNEXES Annex 1 - Constitution of a Negotiating Committee to Consider the Claims of M/S National Projects Construction Corporation, Limited - 1 - PROJECT PERFORMANCE AUDIT REPORT INDIA - GODAVARI BARRAGE PROJECT (CREDIT 532-IN) PREFACE This is a performance audit of the Godavari Barrage Project in India for which Credit 532-IN in the amount of US$45.0 million was approved on February 11, 1975. The credit was fully disbursed and closed on June 30, 1981, with a delay of one year. The audit consists of a memorandum prepared by the Operations Evaluation Department (OED) and a project completion report (PCR) dated May 28, 1982. The completion report was prepared by the South Asia Regional office, partly on the basis of a visit to India in April 1981. The audit is based on a review of the Appraisal Report (525-IN) dated January 10, 1975, the President's Report (P-1561-IN) of January 23, 1975, the Development Credit and Project Agreements dated March 7, 1975, and the PCR together with a review of correspondence with the Borrower and internal Bank memoranda on project issues as contained in Bank files and interviews with Bank staff who have been associated with the project. A copy of the draft report was sent to the Borrower on January 6, 1982. Comments received from the Government of India have been taken into account and are reproduced in Attachment I and Attachment II of the PPAM. On the basis of this abbreviated procedure, the audit agrees with the major findings of the PCR. The audit memorandum elaborates on two issues which are important to this project as well as future irrigation projects to be financed by IDA.  - ii - PROJECT PERFORMANCE AUDIT BASIC DATA SHEET INDIA - GODAVARI BARRAGE PROJECT (CREDIT 532-IN) KEY PROJECT DATA Appraisal Actual or Item Estimate Current Estimate Total Project Cost (US$ million) 69.9 87.5 Overrun (%) - 25 Credit Amount (US$ million) 45.0 45.0 Disbursed ) - 45.0 Cancelled as of March 31, 1982 0.0 Repaid )- 0.0 Outstanding) - 45.0 Date Physical Components Completed 06/79 06/83 Time Overrun (%) - 92 Economic Rate of Return (%) 44 60 Financial Performance Good Institutional Performance Good Cumulative and Actual Disbursements (US$ 000,000) (FY Ending) 1975 1976 1977 1978 1979 1980 1981 Appraisal Estimate 3.0 16.0 32.0 40.0 44.0 45.0 - Actual 5.7 15.5 19.4 25.7 30.4 37.8 45.0 Actual as % of Estimate 190 97 61 64 69 76 100 OTHER PROJECT DATA Original Actual or Item Plan Estimated Actual Government's Application 01/ /69 Negotiations 12/-/74 Board Approval 02/11/75 Credit Agreement Date 03/07/75 Effective Date 06/09/75 Closing Date 06/30/80 06/30/81 Borrower Government of India Executing Agency Government of Andhra Pradesh Fiscal Year of Borrower April 1 through March 31 Follow-On Project None  - iii - MISSION DATA Month/ No. of No. of Man- Date of Year Persons Days ays Report Identification 01/69 2 45 90 03/69 Preparation 06/74 - - Unknown - Pre-appraisal None Appraisal 06/74 4 - 80 06/74 Total 170 Supervision I 07/75 1 12 12 07/75 Supervision II 02/76 1 4 4 02/76 Supervision III 12/76 1 12 12 01/77 Supervision IV 2-3/78 3 5 15 04/78 Supervision V 10/78 1 3 3 01/79 Supervision VI 04/81 2 3 6 05/81 Total 52 Completion 04/81 1 3 3 08/81 COUNTRY EXCHANGE RATE Name of Currency (Abbreviation) Rupees (Rs) Years: Exchange Rate: Appraisal Year Average - 1974 US$1 = Rs 7.976 Intervening Years Average - 1975-80 US$1 = Rs 8.400 Completion Year (January - June) 1981 US$1 = Rs 8.500  - iv - PROJECT PERFORMANCE AUDIT REPORT INDIA - GODAVARI BARRAGE PROJECT (CREDIT 532-IN) HIGHLIGHTS The objective of the project was to ensure a continued supply of perennial irrigation water to 400,000 hectares in the delta of the Godavari River by constructing three barrages and completing another one across the four branches of that river. An old existing weir at the project site was in imminent danger of collapse and if this were to happen an estimated 3.4 million tons of crops would however be lost annually. The project was identified by a Bank irrigation reconnissance mission in 1969 but it was not appraised until June 1974, when the Borrower first agreed to use ICB for civil works construction following a change in Bank group policy to permit a seven and one-half percent preference for local contractors. The project was estimated to cost almost US$70 million of which US$45 million would be financed by Credit 532-IN and the remainder by the governments of India and Andhra Pradesh. The project was expected to be completed in June 1979, but the full project likely will not be completed until June 1983. One reason for this delay was the collapse of an old weir in July 1976 during a high flow, monsoon season. With commendable foresight, the Bank had insisted at negotiations on incorporating into the project plan emergency preparations at the weir site. As a result, the Irrigation Department succeeded in containing the damage to the old weir and to the river bed and in minimizing agricultural losses in the delta. Other reasons for delay were: very difficult construction conditions, slow mobilization and financial problems of the civil works contractor, nonadaptable construction methods, and government rules that imposed con- straints on management. The estimated final cost of the project is US$87.5 million which represents an overrun of about 25%. The objectives of the project have been largely attained despite delays in completion. The incomes of about 150,000 farm families involving almost a million people, have been protected (except during the collapse of the old weir) and will continue to be protected for a long time in the future. Rural employment in the command area has also benefitted. Mainly as a result of higher commodity prices (real) and lower operations and maintenance cost than assumed at appraisal, the re-estimated economic rate of return is 60% compared with 44% estimated at appraisal. One lesson to be learned from this project is that some of the effects of a disaster can be avoided by good planning based on past experience and in- formation at hand (PCR paras. 2.06, 3.26-3.28). - v - Other points that may be of special interest are: - project appraisal was delayed by four to five years due to Borrower's reluctance to use ICB for construction of civil works; however, little interest in contracts was shown by foreign firms and none submitted bids (PPAM paras. 1 and 8); - uncertainty about local conditions may have reduced contractors' interest in bidding on civil works (PPAM para. 12); - the adherence to of ICB procedures improved the quality of civil works design specifications and tender documents, according to Bank/IDA staff (PPAM para. 15); and - on site assistance (supervision) likely would have improved implementation performance of the project (PPAM para. 16). PROJECT PERFORMANCE AUDIT MEMORANDUM INDIA - GODAVARI BARRAGE PROJECT (CREDIT 532-IN) I. SUMMARY-V 1. The Godavari Barrage was one of eight projects identified by a Bank irrigation reconnaissance mission which visited India in January 1969. Two of the identified projects--the Kadana Irrigation Project (Credit 176-IN, 1970) and the Pochampad Irrigation Project (Credit 268-IN, 1971)--were financed quite quickly, but preparation of the Godavari Barrage Project was soon halted due to the issue that arose over the requirement of international competitive bidding (ICB) for the civil works. Although the old existing structure (weir) was in imminent danger of collapse and had been flagged by a high-level Government of India (GOI) committee in 1965 for immediate replacement, it was not until April 1974 that the Government of India agreed to the use of ICB for civil works following a change in Bank group policy to permit a seven and one-half percent preference for local contractors and asked for IDA assistance in financing the project. The project then was appraised in June 1974 and approved in February 1975. 2. The objectives of the project were to ensure continued supply of perennial irrigation water to 400,000 hectares, to protect the incomes of 160,000 farms, involving almost one million people and to protect employ- ment of the area's agricultural labor force. 3. The project was the first IDA-supported operation in India's irriga- tion sector under which GOI had agreed to international competitive bidding for both civil works and the mechanical engineering component. ICB tenders were floated separately for civil works and for manufacture, supply and installation of gates, etc. Contracts were awarded to two Indian firms (both Government of India undertakings). Although there was some interest from foreign firms during the pre-bidding stages, no foreign firm submitted a bid for civil works and only one firm (in joint venture) bid for the water control equipment contract. Considerable time was required to award the contracts due to non-responsiveness to tender specifications which resulted in a call for rebidding and finally, negotiations to resolve some persistent differences in the bids. 4. Work on the barrage commenced in December 1975. The appraisal report contemplated project completion in June 1979 and a credit closing date one year later. However, the project as planned had not yet been fully completed by the closing date. Barrage construction and installation of radial crest gates were completed shortly after that date and the highway 1/ Adapted from PCR. -2- bridge over the piers is planned for completion about Jung 1982. The project completion, therefore, will be about three years late.1 These delays can be attributed to: breaching of the existing weir, very difficult construction conditions, slow mobilization and financial problems of the civil works contractor, non-adaptable construction methods, and constraints imposed on management by government rules and regulations. It is also likely that supervision and implementation assistance by the Bank were spread too thin under the prevailing circumstances. Only four supervision reports are on record for January 1977 to May 1981 (average interval: 17 months). 5. In retrospect, the Bank's role in expediting construction could have been more effective if it had stressed the speedy construction of the base section (raft) of the new barrage only, instead of broadening priorities to include gates as well. The construction of the base section was urgently needed to protected the old weir from collapsing and from a catastrophic er osion of the river bed at the site in event of weir failure. Whereas, the gates provided a water supply improvement which will not be fully realized until the follow-on system modernization program is undertaken and completed. In insisting on an implementation target of four years for the new barrage as a whole, the Bank overestimated the implementation capacity of the Irrigation Department. As it turned out, see para. 4, one section of the old weir collapsed during the construction period before the base section of the new barrage had been completed, and the resulting erosion of the river bed lowered water levels in some of the diversion canals upstream of the barrage, causing considerable losses to agriculture in the delta. With commendable foresight, the Bank insisted at negotiations on appropriate emergency preparations at the weir site to minimize damage in case of failure of the existing weir during the construction period. Sufficient barges and stones were stockpiled at the construction site, and, as a result, the Irrigation Department succeeded in containing the damage to the old weir and to the river bed and in minimizing agricultural losses in the delta. 6. The estimated final cost at completion in June 1983 is estimated to be Rs700.O million compared with an estimated cost at appraisal of Rs559.0 million. At about 25%, this is a rather modest overrun compared with similar Bank/IDA projects implemented during the last half of the 1970's. Most of the cost overrun was a consequence of the breach in the old weir, which occurred in July 1976. 7. The objectives of the project have been largely achieved despite the collapse of the old weir during implementation and some uncompleted minor items. GOAP and the contractor are to be complemented for the excellent quality of works constructed. The incomes of about 150,000 farm families 1/ The Borrower has noted that some minor works will not be completed until June 1983 (see Attachement I, page 1). - 3 - involving almost a million people have been protected (except during the collapse of the weir), and rural employment in the command area has ben- efitted. The economic rate of return at completion has been estimated at 60%, compared with 44% estimated at appraisal. The increase in the rate of return is mainly the result of higher commodity prices (real) and lower operations and maintenance cost than assumed at appraisal. II. ISSUES A. International Competitive Bidding (ICB) for Civil Works 8. The Godavari Barrage Project, together with seven others!', was identified in 1969 as a result of an irrigation reconnaissance mission. However, it was not until 1974 that the Godavari Project was appraised due to the requirement of IDA that civil works would be subject to ICB. Two other projects, Kanada and Pochampad as already noted (para. 1), were approved between 1969 and 1971. Neither project was required to employ ICB for civil works. In one case, Kadana, it was noted in the appraisal report that the project was designed for low cost, labor intensive construction methods and, therefore, foreign firms likely would not be interested in bidding; in the other case, Pochampad, it was stated that a large part of the major civil works contracts had already been awarded by local competitive bidding and that IDA would make an exception for the remainder. In January 1974, the executive directors approved a new policy which would grant a 7-1/2% preference to local contractors in countries where per capita income was less than US$200. With this change in policy, the Borrower requested financing of the Godavari Project with the provision that ICB would be used for civil works. Two of the other five projects identified by the reconnaissance mission in 1969 were also approved subsequently. One, Maharashtra, required ICB for civil works but the other, Gujarat, did not. However, both of the second phases of these two projects were required to use ICB for civil works. Further, five other large scale irrigation projects2/ in India which stipulated ICB for civil works contracts have subsequently been approved by IDA. In addition, four medium and small irrigation projects were approved for support by IDA but ICB for civil works was not required. 9. As noted in the PCR (para. 3.13), a total of 28 organizations purchased tender documents for the civil works contract of the Godavari Project. Twenty-five of these were Indian construction firms. None of the 1/ Mahi-Kadana (Gujarat); Pochampad (Andhra Pradesh), Cauvery Delta (Tamil Nadu), Jayakwadi-Stage 1 (Maharashtra), Tawa (Madhya Pradesh); Krishna Godavari Delta (Andhra Pradesh), and Upper Krishna (Mysore). 2/ Chambal Command Area Development, Periyar Vaigai, Karnataka, Punjab and Uttar Pradesh Public Tubewells. three foreign firms that purchased tender documents submitted a bid and only seven Indian firms submitted bids. None of the bids were in full compliance with the tender documents, mainly due to numerous exceptions to the tender conditions. New price quotations were solicited from all the bidders with the stipulation that all qualifying conditions would be withdrawn. Only two firms withdrew all conditions for two arms of the barrage, and three others withdrew all conditions for another arm. In order not to delay construction for another full production season, the Government of Andhra Pradesh (GOAP) decided, with IDA's approval, to negotiate with the lowest bidders. The award was then made to a local contractor, and work commenced on the barrage in December 1975. 10. More interest was shown by foreign firms in bidding on contracts for the water control equipment. Seven bids were received including one by a joint venture which included a foreign firm. After problems similar to those encountered with bid documents for the civil works had been resolved, the contract was awarded to a local firm. 11. Of the eight irrigation projects noted in para. 8 which required ICB for civil works, foreign firms received none of the contracts. 12. Friction, misunderstanding, delays and significant resource cost are frequently involved in the Bank's procurement requirements stipulated in loan and credit agreements, especially those involving IC1 . ICB has its benefits and costs; where the benefits mainly are due to increased quality and lower unit cost resulting from mass competition and costs mainly are due to time delays and document preparation that may be associated with ICB. In a review of Project Performance Audit Reports for 19 projects that cited ICB as an issue! , eight failed to attract foreign bidding; six of these projects involved civil works. The primary reason cited for lack of interest was that domestic competition was too keen. Other reasons were domestic price policy and lack of knowledge of internal country conditions. In one project, the Bank requested that the tender documents include information on foreign exchange restrictions, taxes, etc., in order to reduce the uncertainty about local conditions and thus increase foreign competition. It is possible that uncertainties about local conditions and legal constraints reduced the parti- cipation of foreign firms in the bidding on civil works for the Godavari Project. 1/ For a more general discussion of this subject see OED Report No. 3557 An Interim Report on Procurement Issues in Bank-financed Projects. July 15, 1981. 2/ Source: OED's Project Performance Information System. - 5 - 13. The firm that received the contract for civil works in the Godavari Project had start-up and financial problems which contributed to the delay in completion of the project. This does not imply that a foreign firm would not have had similar problems. Such a conclusion would need to be based, at least, on a comparison of performance by local and foreign firms under similar contracts, information that is not available. By all accounts, the quality of construction in the project is excellent. 14. In the Godavari project, the provision of information on special local conditions such as taxes and foreign exchange conversion conditions might have improved foreign competition. However, if there are special conditions that are set to discourage foreign competition in a country, these may need to be reviewed with respect to the 7.5% preference granted to local firms-V. 15. Despite the fact that there were no foreign bids for civil works, some Bank staff feel that following the ICB procedures had the effect of improving the quality of the civil works design specifications and the tender documents, which in turn improved implementation performance. The quality of design and tender documents is improved because the engineers who prepare them know that they will be reviewed more closely and widely. B. Supervision 16. It appears that increased supervision, especially in the early part of the project, could have improved performance and reduced the eventual delay in project completion. The intervals of the four supervisions under- taken during the first three years were 8, 10 and 14 months. The first mission, as a matter of necessity, dealt only with procurement of civil works 1/ The Borrower does not agree that the project [may have] experienced lack of interest from foreign firms for civil works on account of constraints such as higher income taxes, legal constraints and uncertain local conditions, citing local competition and labor intensive methods of construction as the reasons, see Attachment I. The Borrower also points out that it is the Bank's uniform policy to allow a 7.5 percent preference in cost to local firms in those member countries where per capita income is below US$265 [the current figure is US$370]. - 6 - and water control equipment. The second mission took place two months after work commenced on the barrage, which is reasonable. But the third mission took place several months after commencement of the construction season, and the following mission was not in the field until about six months after the start of the season. It was during this last period that the supervision mission observed that the civil works contractor was having mobilization difficulties and financial problems. More frequent supervision might have ameliorated these difficulties. Some projects staff believe that continuous on site implementation assistance (supervision) during the start-up period would have improved project performance. 7 - Attachment I Page 1 BORROWER'S COMMENTS INDEMBASSY, WASHINGTON FROM G.K. ARORA, ECOFAIRS TO: DR.REDDY, ADVISOR TO ED, BANK No.127. REGARDING PPAR ON GODAVARI BARRAGE PROJECT, CREDIT 532-IN. AS INTIMATED EARLIER, WE ARE STILL AWAITING COMMENTS FROM GOAP. WE HAD REQUESTED YOU FOR SEEKING EXTENSION OF TIME FOR FURNISHING OUR COMMENTS TILL APRIL 16 WHICH MIGHT HAVE SINCE BEEN ALLOWED BY THE BANK. HOWEVER, TO ENSURE THAT OUR CASE DOES NOT GO BY DEFAULT, ON THE BASIS OF OBSERVATIONS MADE BY THE MINISTRY OF IRRIGATION AND THE PLANNING COMMISSION, WE ARE COMMUNICATING OUR PART COMMENTS AS FOLLOWS: QUOTE. GODAVARI BARRAGE PROJECT HAS BOTH COST AND TIME OVERRUNS. IT IS EXPECTED TO COST APPROXIMATELY RUPEES SEVEN HUNDRED MILLION AND NOT RUPEES SIX HUNDRED TEN POINT SIX MILLION AS INDICATED IN THE PPAR. ALTHOUGH THE MAJOR WORKS ARE LIKELY TO BE COMPLETED BY JUNE 1982, SOME MINOR (FINISHING) WORKS WOULD PROBABLY CONTINUE BEFORE14HIS DATE AND BE COMPLETED BY JUNE 19821 PARA. WE DO NOT AGREE WITH THE PPAR WHEN IT SAYS THAT THE PROJECT EXPERIENCED LACK OF INTEREST FROM FOREIGN FIRMS FOR CIVIL WORKS ON ACCOUNT OF CONSTRAINTS SUCH AS HIGHER RATES OF INCOME TAX, LEGAL CONSTRAINTS AND UNCERTAIN LOCAL CONDITIONS. IF INCOME TAX RATES AND LEGAL CONSTRAINTS WERE THERE, WHICH HAVE UNIFORM APPLICABILITY, HOW IS IT THAT FOREIGN FIRMS HAVE BEEN TAKING VERY KEEN INTEREST AND ALSO WINNING MANY CONTRACTS EVEN UNDER WORLD BANK ASSISTED PROJECTS IN AREAS OTHER THAN CIVIL WORKS. EVEN IN GODAVARI PROJECT, ALTHOUGH SOME FOREIGN FIRMS SHOWED INTEREST IN THE WATER CONTROL EQUIPMENT CONTRACTS, THE FACT IS THAT THE PECULIAR LOCAL CONDITIONSIN INDIA WHICH ARE EMINENTLY CONDUCIVE TO LABOUR INTENSIVE WORK WOULD NORMALLY NOT ATTRACT ANY FOREIGN FIRMS. IT SHOULD BE EASILY RECOGNIZED THAT VERY FEW FOREIGN FIRMS WOULD BE INTERESTED IN AND USED TO THE EXECUTION OF CIVIL WORKS BY LABOR INTENSIVE METHODS ESPECIALLY WHEN 1/ It has been determined by the Indian Executive Director's Office that the word before should read beyond and 1982 should read 1983. Attachment I Fage 2 - 8 - THE EQUIPMENT WAS TO BE BROUGHT INTO INDIA WITH ATTENDANT DISADVANTAGES INCLUDING THE PROBLEMS IN MAINTENANCE OF SOPHISTICATED EQUIPMENT. IN THIS CONTEXT ,WE ALSO DO NOT AGREE WITH BANK'S SUGGESTION THAT THE 7.5 PER CENT PREFERENCE IN COST MADE AVAILABLE TO THE LOCAL CONTRACTORS IS UNWARRANTED. APART FROM THE FACT THAT IT IS THE BANK'S UNIFORM POLICY TO ALLOW A 7.5 PER CENT PREFERENCE IN COST TO LOCAL FIRMS IN THOSE MEMBER COUNTRIES WHERE PER CAPITA INCOME IS BELOW DOLLAR 265 IT IS EVIDENT THAT IN THE CASE OF THE GODAVARI BARRAGE PROJECT THE PRIMARY REASON FOR LACK OF INTEREST BY FOREIGN FIRMS WAS THE VERY KEEN DOMESTIC COMPETITION. THIS HAS BEEN RECOGNIZED BY THE BANK ITSELF IN ITS PPAR. PARA. THE PPAR ALSO MENTIONS THAT COST RECOVERY UNDER THE BETTERMENT LEVY AS MEASURED BY FUNDS RECEIVED IN THE STATE TREASURY IS NOT VERY SATISFACTORY IN INDIA. WHETHER THIS METHOD OF ASSESSING COSTS AND CONSEQUENT COST RECOVERY COMPLIES WITH CONDITIONS OF COVENANT WOULD BE SUBJECT TO LEGAL lMTEPPRu TrON. WE HAVE NOT SO FIR LIEN II GONSULT WITH GOVERN-ut OF ANDHRA PRADESH ON THIS COMMENT MADE IN THE PPAR AND THEREFORE RESERVE OUR OBSERVATIONS. UNQUOTE. WE SHALL TELEX OUR FURTHER COMMENTS,IF ANY, AFTER RECEIPT OF GOAP'S COMMENTS. REGARDS. FOREIGN -9- ETAT MOST IMMEDIATE * Attachment II Page 1 SHRI H N RAY, E.D.(BANK), CARE INDEMBASSY, WASHINGTON FROA: G.K. ARORA, JOINT SECRETARY ECOFAIRS NO. (.) REFER MY TELEX TO REDDY ON APRIL 8,1982, COMMUNICATING COMMENTS ON OED'S PPAR ON GCDAVARI BARRAGE PROJECT CREDIT 532-IN (.) E HAVE SINCE RECEIVED COMNENTS FROM GOAP wHICH ARE REPRODUCED BELO;i (.) THESE MAY KINDLY BE COMMUNICATED TO THE OED FOR INCORPORATION IN THEIR FINAL PPAR (.) 4UOTE (.) AAA PAGE 2 PARA ft OF THE SUMMARY: "THESE DELAYS CAN BE ATTRIBUTED TO ........ A DEFECTIVE CONSTRUCTION METHOD AND MANAGEMENT INFLEXIBILITY (.) COMMENTS OF THE STATE GOVERNMENT (.) THE GODAVARI BARRAGE PROJECT DEPARTMENT HAS TO FOLLOw THE TERMS AND CONDITIO'NS OF THE AGREEMENT AND DISCHARGE ITS FUNCTIONS WITHIN THE FRA-iE.4CRK OF THE RULES AND REGULATIONS OF THE STATE GOVERNMENT (.) THIS BE ING A GOVERNMENT ORGANISATION, IT CANNOT FUNCTION AS FLEXIBLY AS ANY PRIVATE ORGANISATION (.) CERTAIN RULES AND REGULATIONS ARE TO BE FOLLOWjED (.) ON THE OTHER HAND, THE CONTRACTORS SEEK RELIEF BEYOND THE SCOPE OF THE CONTRACT (.) AS REGARDS DEFECTIVE CONSTRUCTION iETHOD, THE CC1STRUCTION PROBLEMS AND PROGRESS E HAD BEEN DISCUSSED AT THE PROJECT SITE eITH THE WORLD BANK MISSIONS P ++DURING THEIR VISITS (.) THESE ASrECTS wERE ALSO DISCUSSED IN S THE VAR. OUS TECHNICAL CONSULTATIVE COM'iITTEE mEETINGS AD THE DEPARTMENT HAS lDOPTED A COURSE OF ACTIO; WHICH vAS CONSIDERED PRACTICABLE (.) Attachment II -10- Page 2 PARA (.) 83B PARA 3..0 ON PAGE 16 (.) COMMENTS OF THE STATE GOVT. (.) THE SUGGESTION MIGHT BE POSSIBLE FOR IMPLEMENTATIO WHERE THE RIVERS ARE COMPARATIVELY SMALL BUT DO NOT APPLY WELL FCR A MIGHTY RIVER LIKE THE GODAVARI (.) FURTHER, THE THREE IRRIGATION CANALS HAVE ONLY A LIMITED'DISCHARGING CAPACITY AND ARE NOT MEANT FOR CONVEYING SURPLUS HIGH FLOOD DISCHARGES CF THE RIVER (.) FOR EXAMPLE. THE UNEXPECTED DISCHARGE IN THE RIVER DUPING . *4%OVEMBER 1977, WHEN IT WASHED AWAY THE COFFER DKvS, ;dAS OF THE ORDER OF 2 LAKH CUSECS WHICH BY NO MEANS COULD BE DIVERTED THROUGH THE CANALS, THE CARRYING CAPACITY OF WHICH, ALL PUT TOGETHER, DOES NOT EXCEED 15000 CUSECS AT THE MOST (.) MOREOVER, THE EXISTING SYSTEM IS ONLY AN ANICUT SYSTEM wHERE THE CANALS CAN TAKE WATER THAT COMES NATURALLY TO THEP ,AS DISTINCT FROM A RESERVOIR SYSTEM, '4HERE THE FLOOD WATER COULD BE IMPOUNDED ON THE UPSTREAM SIDE AND, IF NEED BE, RELEASED THROUGH THE CANALS TO ARREST SPILLING OVEP TWE Qa0 I T MY, H' O4EVER, EE POSSIBLE 'C(C H THE 3-FOOT SHUTTERS OVER THE ANICUT TO ARREST THE FLOW OVER THE ANICUT (.) DIVERTING SURPLUS 'ATER THROUGH CANALS IS NOT A PRACTICABL +PRACTICABLE SOLUTION IN THIS CASE AS THE CANALS HAVE ONLY A LIMITED CARRYING CAPACITY (.) - _1 Attachment II Page 3 PARA (..) ZCC PARA 3.41 PAGE 16 "THERE IS EVIDENCE THAT THE CONSTRUCTION ACCESS PROBLEM TO THE PROJECT SITES..... WAS NOT FULLY APPRECIATED' AND PARA 3.42 "AN EARLIER AND ACCELERATED SCHEDULE FOR CONSTRUCTION OF THE SLUICES WOULD HAVE ASSISTED IN THIS PROBLEM " (.) COMMENTS OF THE STATE GOVERNMENT (.) THE ARRESTING OF FLOW OVER THE ANICUT IS POSSIBLE ONLY FOR FLOODS OF A STAGE OF NOT MORE THAN 3 FEET OVER THE ANICUT, BUT THERE AGRIN THE PROBLEM TO BE FACED IS THAT THE WORK AREAS ON THE BAR UNDER CONSTRUCTION HAVETO PUT UP wITH HIGHER WATER LEVELS, CAUSING E FURTHER HARDSHIP TO THE CONSTRUCTIO:4 IN PROGRESS (.) HENCE, EVEN AT THE TIME OF FLOODS BELOW THE 3-FOOT DEPTH, A BALANCE HAS TO BE STRUCK BETWEEN HOLDING UP THE WATER BY RAS+ RAISING THE 3-F%OT S.HUTTERS OF THE ANICUT TO CREATE DRY CONDITIONS ON THE OWNSTREEDOWNSTREAM OF THE ANICUT, OR ALLOW THE SHUTTERS TO DE FLAT TO FACILITATE LOW WATER LEVELS AT THE MAIN BARRAGE WCRK AREAS, DEPENDING UPON THE INPORTANCE OF THE WORK IN PROGRESS (.) AS SUCH THE READYNADE SOLUTION FOR LAYING GOOD ACCESS ROADS ON THE DOv4ST.REAM OF THE WEIR LIES NEITHER IN UTILISING THE SURP4USSING CAPACITY OF THE - 12 - Attachment II Page 4 IRRIGATION CANALS NOR IN EARLY CCNSTRUCTION OF THE SLUICES (.) A PRACTICAL SOLUTION WOULD LIE IN GREATER RESOURCEFULNESS ON THE PART OF CONTRACTORS IN ADAPTING qUICKLY TO THE TIME-TO-TIME CHANGES BY KEEPING IN READI;*ESS DIFFERENT MODES OF ACCESS TO BE PUT TO USE ACCORDING TO THE DENMADS CF THE SITUATION , AS WAS DEMONSTRATED BY M/S H.C.C. DURING THEIR 4ORKI,G ON DC4LAISHIARAN ARM IN THE YEAR 1976-77 PARA (.) DDD PARA 3.43 "THERE IS ALSO EVIDENCE THAT THE INCLUSION OF THE PERT CHART IN THE TENDER DOCUMENTS IMPEDED RATHER THAN AIDED THE CONSTRUCTION EFFORT'' .... "WHILE THESE FAILINGS WERE RECOGNIZED BY PROJECT MANAGEMENT AND CONTRACTOR, THERE WAS ALMOST A BLIND ACCEPTANCE OF THE ORIGINAL CO;STRUCTION PERT E CHART AND UNWILLINGNESS TO CONSILER MODIFICATION IN CONSTRUCTIO;i APPROACH AND MANAGEMENT" (.) COMMENT OF THE STATE GOVER!iEiENT (.) WHEN IT HAD BEEN RECOGNIZED E THE DEPARTMENT THAT THE PERT CHART PROGRAMME COULD NOT BE ADHERED TO AND WAS TOTALLY INADAPTABLE, THE DEPARTMENT HAD EXERCISED CLOSE MC,ITORING OF THE DAILY PROGRAMME/ PROGRESS WITH A SET-UP OF A SPECIAL MONITORIN.G DIVISION UNDER THE DIRECT CONTROL CF THE CHIEF ENGINEER, GO-DAVARI BARRAGE PROJECT AND HENCE MUCH SIGNIFICANCE WAS NOT ATTACHED TO SUZH A PERT $1 (.) HENCE THE NEED FOR MODIFICATION TO THE PERT WAS NOT FELT (.) - 13 - Attachment II Page 5 PARA (.) EEE PARA 3.44 PAGE 17 (.) COMNENTS OF THE STATE GOVT. (.) IN BIG CONTRACTS AS IN THE CASE OF GODAVARI BARRAGE PROJECT, IT IS ALWAYS POSSIBLE THAT THERE ARE CERTAIN DIFFICULTIES E IN INTERPRETING THE CONDITIONS OF CONTRACT BY DEPARTENT AD THE CONTRACTORS, THOUGH BCTH THE AGENCIES ARE -ORKING FOR THE SAi'E PURPOSE VIZ. EARLY COMPLETION OF THE PROJECT (.) AS POINTED OUT EARLIER, THE DEPARTMENT HAS TO WORK WITHIN THE FRAME.WORK OF CERTAIN RULES AND REGULATIONS AND THE ISSUES CF DISAGREENENT wITH THE CONTRACTORS HAVE TO BE SOLVED .WITHIN THE FRAf';EWORK OF THE ..END OF THREE PAGE .... ps - - "-- .- - 9 P-4:: DEPARTMENTAL RULES (.) PARA (.) FFF PARA 3.L15 OF PAGE 17 'ONE MAJOR SOL CE OF DELAY IN THE COMPLETION OF CONSTRUCTION WAS GOAP'S SLOWNESS IN APPROVING A DESIGN CHANGE FOR THE BRIDGE OVER THE BARRAGE ' (.) COMMENT OF THE STATE GOVT. (.) . OF THE STATE GOV ORK OF BRIDGE OF THE PROJECT IS ALMOST THE LAST ITEM OF THE BARRAGE ,'ORK (.) ON ACCOUNT OF PRACTICAL CONSIDERATIONS, THE DESIGN OF THE BRIDGE HAS BEEN CHANGED OVER FROM R.C.C. TO P.S.C. (.) THE SUBSTRUCTURE AND PIERS OF THE EA+ BARRAGE COULD NOT BE CCNPLETED WITHIN THE ORIGINAL STIPULATED PERIOD DUE TO VARIOUS REASONS INCLUDING THE BREACH OF OLD ANICUT, CON +CONSTRUCTIONAL DELAYS ETC. (.) CONSE,UENTLY, THE WORK ON THE Attachment II Page 6 P.S.C. BRIDGE WAS ALSO DELAYED (.) THERE WAS SOME TIME LAG IN FINALISING THE DECI*DESIGN CF THE BRIDGE AS CERTAIN DESIGN ISSUES WERE UNDER CORRESPONDENCE WITH THE CONTRACTORS AND THE CONTRACTORS COULD ACT FURNISH THE RE,4UIRED INFORMATION IN TIME (.) PARA (.) dGG PARA 2.01 PAGE 1 "AS IRRIGATION DEMAND IN THE COMMAND AREA INCREASED , THE WEIR CREST WAS RAISED AND STEEL SHUTTERS ADDED , RAISING THE POND LEVEL BY 1.19 M OVER THE ORIGINAL DESIGN LEVEL " (.) COMMENT OF THE STATE GOVT. (.) AS SEEN FROM THE REPORT OF THE GODAVARI HEAD dORKS DIVISION. THE CREST OF THE ANICUT WAS PLUS 39 FEET PRIOR TO THE YEAR 1866 AND THIS LEVEL WAS RAISED BY 0.75 FEET DURI4G THE YEAR 1998 AND 3-FGOT SHUTTERS WERE ADDED SUESE4UENTLY, BRINGING THE PO4KG) LEVEL TO PLUS 41.75 FEET (.) THUS THE RISE IN POND LEVEL IS (41.75 MINUS 38.00 ) EWUAL TC 3.75 FEET THAT IS 1.14 M. AND NOT 1.19 M. AS MENTIONED IN THE REPC7 .) PARA (.) HHH PARA 3.14 OF PAGE 9 "NATICNAL PROJECTS CCrSTRuCTIO E -N SUBMITTED THE LO EST SINGLE BID .... WHICH WAS 190 ABOVE THE ENGINEERS' ESTIMATE ..." AND FOOTNOTE 1/ON PAGE 10 (.) COMM-ENT OF THE STATE GOVT. (.) ...END OF PAGE FOUR a:::: - 15 - Attachment II Page 7 P-5. THIS POSITION IS NOT CORRECT (.) THE ESTIMATES WITH WHICH THE BIDS 'ERE COMPARED WERE CURREiiT AT THE TIME OF PREPARATION OF TENDER SCHEDULES AAD INVITING TENDERS AND ARE NOT OUT-DATED BY 3 OR 4 YEARS (.) UNqUOTE (.) REGARDS (.) FOREIT+ --FOREIGI COLLS:- Z-A99 13n' 152035 MEA/JK/11125 CORRECTIC1 IN N-256. PAGE /Z-1P9 PAGE FOUR .. LINE AFTER COMMENT OF THE STATE GOVT.(.) THE WORK OF BRIDGE OF THE PROJECT IS ALMOST THE LAST ITEM OF THE BARRAGE WORK (.) ON ACCOUNT OF PRACTICAL CONSIDERATIONS,THE DESIGN OF THE.BRIj,E HAS BEE4 .....ETC.PL CRT TKS ....  - 16 - INDIA CREDIT 532-IN GODAVARI BARRAGE PROJECT PROJECT COMPLETION REPORT May 28, 1982 - 17 - INDIA GODAVARI BARRAGE PROJECT COMPLETION REPORT I. SECTOR SETTING 1.01 The project was the third irrigation project in Andhra Pradesh financed by IDA - the two preceding ones being the Andhra Pradesh Agricul- tural Credit Project (Cr 226-IN, 1970) and the Pochampad Irrigation Project (Cr 268-IN, 1971). 1.02 Andhra Pradesh, with an area of 27.5 million hectares and a (1981) population of 53.4 million, is one of the largest States in India. In terms of size and population it compares with Italy. It is a predominantly agricul- tural State, 82 percent of its population being rural. About 40 percent of the total area of the State is cultivated. Rice, millet, pulses, and ground- nuts are the major crops. A quarter of the total cultivated area is under irrigation. The rest depends upon rainfall, which ranges from 500 mm annually in the southwest to 1,100 mm in the northeast. 1.03 The main source of irrigaI- in Cne State are two major rivers, the Godavari and the Krishna, and their tribLtaries. Numerous irri''ation canals branch from these rivers. The upland areas ube rainfed tanks and groundwater for irrigation. II. FORMULATION The Existing Weir 2.01 The project was to construct a new barrage (weir) across the lower Godavari River to replace an existing weir which was in imminent danger of collapsing. The existing Godavari weir, built entirely of bricks and masonry, was constructed during the years 1847-1852. As irrigation demand in the command area increased, the weir crest was raised and steel shutters added, raising the pond level by 1.14 m over the original design level. As the weir is founded on sand and as flood flows are large, erosion immediately downstream from the structure was a continuing problem and constant mainten- ance was necessary. In spite of the maintenance efforts, however, the condition of the structure steadily deteriorated. 2.02 By 1965 deterioration of the Godavari weir had progressed to such a degree that a high-level committee was set up by the Ministry of Irrigation and Power, GOI, to advise on immediate remedial measures and on the desirabil- ity of reconstruction. The committee recommended immediate construction of a new barrage and provided outline designs and cost estimates for the work. However, due to a shortage of development funds, work was only started in 1971 and less than 5% of the construction had been completed by appraisal time. - 18 - 2.03 The primary cause of deterioration was erosion on the downstream side of the weir, due in part to flows across the weir but also :n some areas to strong lateral flows along the toe of the weir. The secondar, cause of deterioration was piping 1/, aggravated by erosion of the downstieam apron. Severe piping of fill from beneath the weir caused concentration of load onto the cylindrical brick caissons which partially support it. This in turn contributed to structural failure of the foundations. 2.04 Preparation, Appraisal and Agreement. In January 1969. a Bank Irrigation Reconnaissance Mission visited India at the request or the Govern- ment of India. It identified eight irrigation projects for Bank Group assis- tance including the Pochampad Project and the reconstruction of the Godavari Barrage in Andhra Pradesh. For the latter, preparatory work soon came to a halt due to the issue that arose over the Bank's requirement of international competitive bidding for the civil works included in the project. In April 1974, on the basis of the new Bank group policy regarding preferences for local contractors, the Government of India asked for IDA assistance in imple- menting the project. The project was appraised in June 1974 after a short period of preparatory work by the FAO/IBRD Cooperative Program. 2.05 A report entitled "India - Appraisal of the Godavari Barrage Project" was completed in September 1974 and circulated as a basis for negotiations. Negotiations were held in Washington in December 1974. Draft development credit and project agreements were finalized March 7, 1975. July 7, 1975 was specified as the effective date. Board presentation was on February 11, 1975. 2.06 The project was novel in a number of respects: Firstly, it was the first project for India with a large civil works component suitable for inter- national competitive bidding, where the 7-1/2 percent preference for local contractors applied. This new policy was expected to expose Indian contractors to foreign competition, which was believed would strengthen the Indian contract- ing industry. A special effort was made during negotiations to assist the project authority in preparing tender documents in order to make them conform to international practice. Secondly, the reconstruction of the Godavari Barrage would not create any significant additional benefits to the economy or to the beneficiaries. It rather was to ensure that benefits, which have been derived for more than a century from the Godavari waters and which were in jeopardy, would continue to be available to the 160,000 farmers in the command area. And thirdly, the project was not entirely free from risk. It was correctly feared that the old weir, or one section of it, could fail in a flood, while the new barrage was being constructed. The cost estimate for the new barrage contained a contingency allowance should failure occur during the construction period. It was recognized that a breach of the weir would result in great losses to the farmers and the economy and in fact the economic viability was analyzed on the basis of losses that could occur in agricultural production if failure were to happen. In order to keep this risk as low as possible, an agreement with the Government of Andhra Pradesh and with the Central Government was negotiated for the new barrage to be constructed in the shortest period of 1/ Piping is the movement of soil particles by percolating water through the body of the dam, leading to the development of gradually widening seepage channels. - 19 - time possible and to provide adequate arrangements for emergency repairs to the old weir in the event of failure. Failure did actually occur a year after project effectiveness with a major crop loss in the area served by one of the three irrigation canals that divert at the barrage site. The Project 2.07 The project involved the construction of a barrage across the lower Godavari river at Dowlaiswaram to secure irrigation water for a command area of about 400,000 ha in the districts of West Godavari and East Godavari. The barrage replaced an existing weir, which was in danger of collapse. 2.08 The new barrage is located 24 meters upstream from the old weir and uses the existing structure as its downstream protective apron. The barrage is 3,600 meters long and consists of four sections, separated by small islands. It is divided into 175 bays, each of which are equipped with a crest gate. The gates raise the pond level one meter higher than the level of the exist- ing weir. Three main canals serve the command area in the Godavari delta. Some 160,000 holdings, with an average farm size of 2.5 ha, are supplied with water from the weir. About 65 percent of the farms are owner-cultivated. Average annual farm income at time of appraisal was about Rs 7,500 as a result of intensive cultivation of the command area, most of it under peren- nial irrigation. 2.09 The Godavari delta is one of the most productive agricultural areas of eastern India. The most important crop is paddy, which covers more than 90 percent of the area in the wet season (kharif) and about one third of the area in the dry season (rabi). About one half of the kharif crop and 80% of the rabi crop are high-yielding varieties of rice. Average paddy produc- tion in the area during the five years preceding appraisal was about 1.4 million tons. Other crops in the command area are sugarcane (perennial) and pulses, edible oilseeds and chillies. Cropping intensity is approximately 150%. Total net value of production in the area at that time was estimated at Rs 900 million. The proposed new barrage was to help safeguard this production. 2.10 The project included also the execution of a technical study for preparation of a second-phase project that would concentrate on command area development in the Godavari delta, particularly modernization of irrigation and drainage, groundwater development and on-farm works. In addition, it included assistance to GOI for the preparation of command area development projects in other States of India. Project Design 2.11 Water Demand and Supply. The water conveyance system from the weir is designed for gross water duty of 1.0 lit/sec/ha and a yearly diversion of some 5,000 Mm . Except for the land preparation and transplanting period in May and June, the duty is sufficient to meet irrigation demand in the kharif season. During the transplanting period the required water duty is consider- ably higher. Owing to reduced river flow during May and June, and the lack of canal conveyance capacities, the land preparation and transplanting season has to be staggered from May 15 to August 15. Paddy transplanted later in the - 20 - season produces lower yields and is more susceptible to flood damage. From May 15 to July 15 the flow in the Godavari is subject to rapid fluctuations. By properly operating the gates in the new ba rage, some of the flows, which in the past spilled over the weir (some 50 Mm ), can be stored and utilized to increase the supply to the delta during this peak period. The increase in the diversion head, from + 12.64 m with the old weir to + 13.64 m on the new barrage, will increase conveyance capacity through the main canal network by 25%, from 1.0 lit/sec/ha to 1.25 lit/sec/ha. To carry these increased flows, the freeboard in some stretches of the main canals will need to be encroached upon until modernization work on the canal systems is undertaken. 2.12 Supply to the rabi (dry) season crop is limited by the availability of water in the river, rather than by canal capacities. A dry season crop can be supplied on some 150,000 ha during January, F5bruary and early March in three years out of four. A deficit of some 50 Mm that occurred in the second half of March and in the past April can now be made up from crest storage provided in the new barrage. 2.13 Engineering Design. Site exploration for the whole barrage, hydraulic model studies and detailed designs for the civil engineering works of the Ralli section were complete at the time of appraisal. As all four sections are similar in design, the Ralli section design was used for tender- ing for the remaining civil works. Design work was carried out by the Central Water and Power Commission (CWPC). Responsibility for the preparation of working drawings, construction specifications, negotiations of contract and supervision of construction, rested with the COAP Public Works Department (PWD). 2.14 Implementation Schedule. Project implementation for all civil engineering works, including most of the road bridge over the barrage was expected to take three and a half years and was to be completed by June 1978. The manufacture of all 175 gates and hoists and the erection of at least 130 gates was to be completed by June 1978 with the balance of the gates erected by June 1979. The first construction season, from February to June 1975, was to be used for the construction of six bays of the Dowlaiswaram section. The construction seasons, from November 1975 to June 1978, were to be used to complete all civil works construction except for portions of the road bridge on the Dowlaiswaram and Vizzeswaram sections. During this period the power connection to operate the hoists was also to be completed and 75% of the crest gates and hoists installed. From November 1978 to June 1979 the road bridge was to be completed and the remaining gates and hoist arrangements installed. Cost Estimates 2.15 A cost estimate of Rs 265.9 m for the replacement of the existing barrage was approved by GOAP in December 1969 and was cleared by the Planning Commission in December 1971. This was revised upward in March 1975 to Rs 373.2 to provide for reinforced concrete monolitic sill slabs instead of a mass concrete raft provided in the earlier estimate. - 21 - 2.16 The estimated total cost of the project at the time of appraisal was US$70.0 million (Rs 559M) including US$20.0 million (29%) in foreign exchange. The foreign exchange requirements were based on the assumption that all works would be carried out by local contractors. If the works were contracted to foreign contractors the foreign exchange requirements was likely to be US$32 million. Estimated costs were based on price levels pre- vailing in January 1974 and included expected price increases, beginning at 17% in the first year and tapering to 11% in the fourth year. Overall price increases were estimated at 26% of the total cost of the project. Physical contingencies of 15% for the mechanical engineering works and 25% for the civil works were included. The relatively large physical contingen- cies for fairly simple civil engineering construction works was included to allow for risks arising from a possible failure of one of the weir sections during the four-year implementation period. Such a failure could involve an increase in the cost of the barrage in the affected section. 2.17 A breakdown of project costs as shown in the appraisal report is summarized as follows: Local Foreign Total Total ------Rs Million--------- US$ Million Civil Works 163.8 44.6 208.4 26.05 Mechanical Engineering Works 32.0 52.0 84.0 10.50 Engineering and Supervision 42.2 4.7 46.9 5.86 Technical Assistance to GOI for Preparing CAD Projects 4.8 2.4 7.2 0.90 Preparation of Second Phase Project 2.6 0.6 3.2 0.40 Sub-Total 245.4 104.3 349.7 43.71 Physical Contingencies 45.8 18.9 64.7 8.09 Estimated Price Increases 107.8 36.7 144.5 18.06 Sub-Total 153.6 55.6 209.2 26.15 Total Project Costs 399.0 159.9 558.9 69.86 Rounded to 70.00 The Engineering Implications of Failure (as visualized at appraisal) 2.18 Failure was considered most likely to occur in the form of a sudden settlement of a portion of the weir during a period of maximum hydraulic gra- dient followed by the formation of open shear cracks on either side of the settlement area. Flow concentration through the cracks and over the col- lapsed portion of the weir would cause rapid widening of the breach by lateral erosion and an undermining of the weir foundations. By the time repairs could be effected, at low flows, the break could be a major one, probably several hundred meters wide and of considerable depth. 2.19 Assuming that a weir failure did occur early in the flood season (July), it was believed that the recurring floods would wash away most of the - 22 - affected section and deeply scour the riverbed in the breached area, and that the scouring would gradually move upstream into the reservoir. It was anti- cipated that the resulting bed erosion would necessitate a design change in the new barrage which could result in a significant increase in the cost of the affected section. It was expected that there would also be a delay in the construction schedule because of the need for additional hydraulic model studies and the preparation of new designs. 2.20 It was hoped that through emergency repairs, similar to those under- taken following the breach of the weir on the Krishna river some 15 years earlier, a breach might be plugged before it had a major effect either on the riverbed or on the irrigation water supply to the command area. The success of such repairs would depend upon the initial width of the breach and on the stages of the river following the breach. To avail of such favorable circumstances, should they occur, it was agreed at appraisal that materials needed for emergency repairs were to be stockpiled and equipment was to be kept ready at the weir site during the construction of the new barrage. Agricultural Implications with Failure (as visualized at appraisal) 2.21 It was expected that a breaching of the weir would lower the pond level at the canal inlet structures such that during the monsoon season water levels in the river would be only marginally if at all higher than the canal beds thus severely restricting the irrigation water that could be diverted. This would result in the loss of a major part of the kharif crop. During the dry season no diversion would be possible and there would be no rabi rice crop as rice can only be grown with irrigation. Areas under rabi crops other than rice, would also be considerably reduced. If water supplies remain interrupted for more than one year, it was anticipated that farmers would follow the pattern of rainfed agriculture, practiced in the surrounding non- irrigated areas. The expected loss in net value of production following a weir failure was estimated at Rs 800 million (US$100 million). Pre-Appraisal Construction Progress 2.22 Subsidence in the Dowlaiswaram Arm had been observed following the floods in 1970 and it continued in 1971 and 1972 even though repairs were promptly made. A Consultative Committee set up by GOAP/GOI, therefore, strongly pointed out in February 1974 that any further postponement of barrage construction "was fraught with grave risk to the weir". 2.23 A contract had already been let in 1970 to Pioneer Engineering Syndicate for construction work on the Ralli section. Funds were limited and progress slow. By March 1975 only Rs 55.9 M had been expended against a December 1969 sanctioned estimate of Rs 265.9 M. 2.24 In March 1975, GOAP approved plans for laying downstream and upstream aprons, construction of right abutment and driving sheet piles for 12 bays (59 to 70) of the Dowlaiswaram Arm and entrusted the work in the 12 bays (contract value: Rs 3.05 M) to six contractors to be completed before June 15, 1975. The contractors, however, were not able to complete the work in any of the bays in the limited time available and the work was abruptly stopped by flash floods on June 28, 1975. As no protective measures could be taken for - 23 - safeguarding the works already executed an essentially new start was made by the department in the next working season (1975-76) to rectify the damages caused by floods and to re-excavate the pits for foundations which were not covered before the onset of floods. Certain items of tools and plants such as cranes (2), air compressors (1) and pile driving equipment (1) which had been given to the contractors on hire were also damaged in the flash floods. III. IMPLEMENTATION The Issues at Negotiation 3.01 During negotiations GOAP was asked to provide assurances that: (a) for the construction of the barrage, GOAP would employ con- tractors acceptable to the Association on terms and conditions satisfactory to the Association; (b) it would, under arrangements satisfactory to the Association, cause the barrage to be inspected at least once every five years for deficiencies or potential deficiencies, which may endanger its safety; (c) it would, during the execution of the project, stockpile materials and maintain equipment at the project site for emergency repairs of the existing weir; (d) it would, not later than December 31, 1975, make arrange- ments to levy and collect, within not more than ten years, from beneficiaries of the barrage all investment costs of the project; and (e) it would furnish to the Association, not later than six months after the end of each fiscal year, certified copies of audited financial statements for the project (except for the part of the project that is to be implemented by GOI). 3.02 GOI and GOAP were also asked to provide assurances, through an exchange of Side Letters, that the project would be executed in accordance with a detailed time schedule that would ensure a construction period not exceeding four years for the completion of the barrage, with civil works completed and 130 gates installed by June 30, 1978. 3.03 The appraisal mission found that the existing barrage was in grave danger of collapsing and consequently proposed that every effort be made to complete the new barrage within the technically feasible minimum period of four years. The Bank took the position that it would have to insist on a four-year construction period if it were to associate itself with the project. It developed in the negotiations that GOI and GOAP were willing (or at least so stated a willingness) to complete the barrage within a four year period. However, as the urgency to proceed with this project had not been properly appreciated, adequate budget provisions had not been made by GOAP to finance construction over the four year period. - 24 - 3.04 The State Government agreed to provide US$20 million but felt it was unable to contribute more in view of the difficulty of mobilizing addi- tional resources and of making readjustments in the budget at a time of budget stringency and drought problems. The Government of India (GOI) was, therefore, asked to contribute US$50 million, which was an unusually large proportion of project costs. 3.05 G0I, itself, was in an extraordinarily difficult budgetary position at that time on account of energy problems, the desperate food situation and the need to reduce the budget deficit in an effort to curb inflation. As IDA had been insistent on a construction period of four years and in view of India's present economic circumstances, IDA management decided to increase its percentage contribution from the normal 50% to 60% so as to ensure adequate funding over the initial period of the project. Conditions of Effectiveness 3.06 The requirements set forth in the Development Credit Agreement for effectiveness were standard and caused no problems in startup. Start-Up 3.07 Discussions were held in Washington, D.C. at time of negotiations on the revisions to be made in tender documents for the main civil works contract. Tender opening had been scheduled for April 15, 1975. Rather extensive revisions were recommended and it was agreed that a revised version would be submitted for IDA review by the end of January 1975. 3.08 GOAP followed with a revised typed copy of tender conditions which were received by IDA in early February. Their proposal was to distribute the tender documents to prospective bidders before IDA review and then to issue supplementary notice to purchasers of the documents setting forth IDA's recommended changes. This was not accepted by IDA as it would be unfair to potential bidders to be kept in suspense over the final version of the tender. The date for receipt of tender was, therefore, extended to May 15, 1975. 3.09 The balance of the draft tender documents were accordingly mailed from India on March 6. They consisted of Section II of Volume I: Schedules, Tender and Technical Specifications and Section III of Volume I: A.P.D.S.S. (Preliminary specifications and additional conditions). 3.10 The ensuing reviews and exchanges of correspondence narrowed the major points of issue down to two which were major points of principle and two that seem to be misunderstandings because of continuing ambiguities in language. The first two were: (a) GOAP's firm position that it would not accept any provision permitting the Contractor to claim and be reimbursed for additional costs resulting from delays in delivery of Government furnished materials and work sites. - 25 - (b) GOAP's firm position that disputes or differences between the parties should be decided by a Chief Engineer of GOAP as the sole arbitrator. Bank recommended arbitration in accordance with the rules of the International Chamber of Commerce, Paris, and which was accepted by GOI for Credits 242-IN, 377-IN and Bombay Water Supply Credit. The other two issues were: (a) The restrictive provision permitting foreign contractors to use Indian sub-contractors on "up to 50% of the work" only. (b) The restrictive provision permitting the successful bidder to import only specialized items of equipment that are not available in India, thus forcing foreign contractor to acquire all other equipment locally even though he may already own same. 3.11 GOAP's position on the four points above was considered to be in conflict with sound criteria for International Competitive Bidding. Without GOAP's acquiescence on the two points of principle and acceptable clarification of language on the other two points, it was concluded that international competition would not be forthcoming on the project. 3.12 To resolve the problems a two-man IDA mission visited Andhra Pradesh from April 1 through 18, 1975 to review and discuss the civil works procure- ment documents. As a result approximately 50% of the 300 pages of documents were changed. All revisions were finalized during this period and the mission concurred in the issuance of the bidding documents as of April 18 with bid opening July 2 and award of contract scheduled for October 1, 1975. The mission's critical scrutiny and edification of the procurement documents for definitive and clear stipulations and fair and equitable requirements was of special importance, since the Godavari Barrage Project constituted the first Bank/IDA operation involving international competitive bidding on civil works in India. Bidding Experience on Civil Works Procurement 3.13 A total of 28 organizations purchased the documents. Twenty-five of the organizations were Indian construction firms. One was a Japanese firm. One was the Korean Embassy, and the other a manufacturer of specialized con- struction equipment and machinery in the United States. 3.14 Bids were opened on July 2. Seven firms (all domestic) submitted bids. All of the bidders were well known and all were considered (by GOAP) qualified to perform the work. One bidder quoted on only part of the work. Another bidder quoted on only two sections of the weir. However, the other five bidders quoted for all four sections. Three of the firms (National Projects Construction, Continental Construction, and Hindustan Construction) quoted on the condition that they receive an award for all of the sections. National Projects Construction submitted the lowest single bid (Rs 178,,942,610) - 26 - for the complete weir (civil works), which was 19% above the engineers' esti- mate of Rs 149,872,906. 1/ The lowest combination of bids for the entire job was as follows: Section Contractor Amount (Rs) Dowlaiswaram & Ralli Andhra Pradesh Civil Construction Co. 95,265,100 Maddur Pioneer Engineering Syndicate 28,378,800 Vizzeswaram Pioneer Engineering Syndicate 51,579,616 175,223,516 3.15 None of the bids were in full compliance with the tender documents and all had numerous exceptions. 2/ In view of the very tight implementation schedule and the critical need for starting the work, the Bank recommended that GOAP review the qualifying conditions of the lowest combination bidders and negotiate acceptable terms. GOAP did not agree and in the ensuing dia- logue it was decided to solicit new price quotations from all seven bidders on the basis of full compliance with all the terms and conditions of the original tender documents (except the liquidated damages provision) and with a specific firm stipulation that failure to withdraw all qualifying conditions would automatically disqualify the tender. 3.16 By September 30 new bids had been quoted. Only two firms (National Projects Construction Corporation and Continental Construction Company) withdrew all conditions for the Dowlaiswaram and the Vizzeswaram arms and only three firms (National, Continental and V. Shubba Rao & Co.) withdrew all conditions for the Maddur arm. GOAP was ready to award contracts to National, Continental and Hindustan Construction Corporations as a combination, but it appeared there was some doubt that the instructions to the bidders clearly stated that failure to withdraw all qualifying conditions would automatically disqualify the tender. 3.17 Since to reject all bids, revise the terms, conditions, and other requirements, and re-advertise would have resulted in a prohibitive delay, it was decided to try and negotiate mutually acceptable terms and conditions with the lowest bidders. It was recognized that any further delay in final- izing the contract could result in the loss of a full construction season, as well as serious delays in the gates procurement. Therefore, the negotiation route was followed and an award was ultimately made to National Project Con- struction (a GOI sponsored company) for an amount of Rs 191 M net of price contingencies but including additional quantities. Work on the new weir was commenced by them in December 1975. 1/ Although it is common practice in some States in India to index unit rates upward from detailed rate schedules that are several years old, GOAP states that "the estimates with which the bids were compared were current at the time of preparation of tender schedules and inviting tenders." 2/ An exception is one specifying terms, conditions, and/or specifications different from those set forth in the bid documents. - 27 - Bidding Experience on the Gates 3.18 It was decided that for the supply and installation of the gates potential bidders would be subjected to a prequalification scrutiny. Some thirty organizations submitted requests for prequalification. In its initial review, the Public Works Departmnt eliminated 10 organizations (all domestic). After discussions and further review, two more were eliminated as they were government workshops. The 18 organizations remaining were considered quali- fied. Of these, 11 were foreign firms or representatives thereof, 6 were Indian firms, and one was a joint enterprise (domestic and foreign). Although known to be qualified, several of the 18 firms failed to submit some of the data requested for prequalification purposes so telegraphic requests were initiated for the missing data and the issuance of tender documents to those firms were withheld pending their response. 3.19 IDA in its review of the tender documents suggested including a liquidated damages provision similar to the revised one for civil works, and a provision for price increases caused by inflation for those gates scheduled for delivery after November 1, 1976, which GOAP agreed to. 3.20 The schedule was to have the documents printed and ready for issuance by August 1, 1975. The bidding period was set at 75 days, subject to the understanding that it would be extended if bidders asked for such an extension. The time for evaluation of bids and award of contract would then be reduced accordingly. 3.21 hidL were opened November 5, 1C976. There were seven bids ranging from a low of Rs 91.7 M to a high of Rs '02 M (Nissho Iwai, a joint venture by a foreign firm). 3.22 Central India Machinery's low bid of Rs 91.7 M was found incomplete and also found non-responsive otherwise. The lowest responsive bidder at Rs 115.5 M had quite a few exceptions whereas the second low responsive bidder (Jessops) at Rs 124.6 M and the third low (Rs 128.3 M) had only a few excep- tions. The Bank's initial position was that all bidders be given 48 hours to amend their bids (upward only) to compensate for conditions attached to their original bid. It was proposed also, to disqualify rebids which remained with any conditions. GOAP considered this proposed procedure unacceptable as the low bidder would have an opportunity through the process of withdrawing and compensating on exceptions to end up just under Jessop's initial bid. 3.23 GOAP went through a process of assigning values to the exceptions stated in the bids which came up showing Jessop to be the lowest. On the basis of these reevaluations GOAP proposed to negotiate with Jessop - 28 - only. 1/ This was unacceptable as there was too much latitude in selecting the quantities and unit prices to apply. In some instances they were con- tractor supplied and in other cases GOAP engineers supplied the figures. 3.24 The resulting impasse was resolved by rejecting all bids and inviting all seven original bidders to resubmit on the following basis: AAA - Fourteen days for quotations BBB - No alternative designs CCC - Site fabrication permitted DDD - GOAP specific clarification of remote control systems which are acceptable and those which are not acceptable EEE - Embedded parts identified in the retender documents as required during the first construction season are to be provided by GOAP and not by contractor FFF - Special GOAP formal notice that only those bids which are fully responsive and without any exceptions will be considered and that all others will be rejected outright GGC - GOAP will identify the latest basic rates and indices applicable to the escalation provisions 3.25 In the rebidding Jessop was low with a bid of Rs 109.7 M and the bid was accordingly awarded to them in January 1976. Construction Problems 3.26 Failure of Dowlaiswaram Anicut. As feared, a breach did occur in the Dowlaiswaram arm on the night of July 8, 1976. The river was flowing about 70,000 cusecs at that time. The lowering of the water level above the barrage immeditely reduced irrigation supplies in the Central Delta and the West Delta canals. The Eastern Delta canal head sluices were unable to draw any water. 3.27 Protection arrangements to prevent widening of the breach (490 feet initially) were commenced on the afternoon of the 10th. The width of breach was contained by dumping heavy stones at both ends of the breach. GOAP fully mobilized to meet the emergency and spared no funds in attempting to save the 1/ To avoid the obvious problems that arise in attempting to cost exception items after bids have been opened, some states in India (Gujarat for one) ask that all proposed exceptions be submitted one week ahead of the bid opening date. An evaluation is made by a committee and their determin- ation of the associated cost is available for prior scrutiny on the official bid opening date. The adjustments are then added or subtracted to each firm's bid as opened. The low bidder at bid opening is then discernible immediately after all bids have been opened and adjusted. The other alternative approach is to hold a pre-bid conference where all questions and problems can be ironed out before firms complete their bids and amendments made if necessary to the tender documents. Of course, the ideal situation is to have bids without qualifications or to be in a position to reject all bids which have qualifications. This procurement objective has not been realized in India. - 29 - situation. By July 22 some 60 trucks were conveying stone and concrete blocks to the breach. However, it was soon obvious that the breach could not be closed until flood waters subsided sufficiently in September. 3.28 The breach section scoured both upstream and downstream for one mile length and to a maximum depth of 45 feet. To complete the permanent repairs, GOAP invited Hindustan Construction Corporation to enter into a joint venture with National Projects Construction Corporation to complete by June 1977 the following items at the costs shown: Joint Venture (Rs. million) 1. Completion of 61 spans Dowlaiswaram sub-structure 59.0 2. Breach closure and restoration of old weir to pre-breach condition 23.0 3. Additional upstream coffer dam to stop flow in Dowlaiswaram arm 5.8 Sub-total 87.8 Additional Extra Costs 4. Extra de-watering foundations expected due to deep scour, disturbed soil conditions and high tail water 1.4 5. Acquiring additional quarries because of twofold increase of stone required 2.0 6. Bailey Bridge across Eastern Canal for improved work access (excludes hire cost from Army) 2.0 7. Cost of supply and installation of new shutters lost in breach 1.0 8. Pontoon bridge over Eastern Canal also for improved access 1.0 9. Scour treatment of river and miscellaneous 5.6 10. Capital cost of pumpsets for irrigation and operating cost 10.0 TOTAL 110.8 1/ 1/ Some Rs 53.4 M of this amount would be directly assignable to extra work caused by the breach. - 30 - 3.29 Pumping Water into the Eastern Canal. In order to save the standing kharif crops in the 100,000 acres served by the Eastern Canal of the Godavari system, a proposal to pump 1,000 cusecs of water from the river from eight places for a period of 90 days was approved by the Government in July 1976. The Superintending Engineer placed orders between July 19 and July 31, 1976 for the supply of 39 pump sets at a cost of Rs 5.77 M. The supply and installation of the pumpsets were to be completed within three weeks from the date of purchase orders. No pump sets were supplied and installed within the stipulated period, however, and the resulting delays ranged from 9 to 94 days. 3.30 Twenty-two pumpsets were received in August 1976. The total expenditure incurred till May 1977 on the purchase and installation of these sixty-one sets was Rs 10.24 M. 3.31 The supply of water from pumps ranged between 90 and 412 cusecs only upto October 20, 1976 and no water could be pumped thereafter. Thus, the object of supplying 1,000 cusecs of water for 90 days during kharif did not materialize fully. The shortfall in pumping was attributed by the Department to insufficient depth of water at the pumping sites. 3.32 Quarry Channel. In order to provide drinking water to the villages and towns dependent on the Eastern Canal, the Government approved in September 1976 a scheme to pump 400 cusecs of water from the upstream coffer dam into a channel (called the Quarry channel), which joined the Eastern Canal downstream of the weir. The pumping was proposed to be done from January 1, 1977 to the end of June 1977, by which time repairs were expected to have been completed so that water could be sent through the head sluices as in the past. 3.33 The work involved installation of 30 pump sets and electrical transformers and excavations of the channel. Pending sanction the work was awarded to two contractors on a "nomination" basis in January 1977. Although work commenced immediately, it was not completed until March 1977 as the embankment of the channel slipped and there was heaving of soil in the bed of the canal in certain reaches. Diversions through the quarry channel started only from 7th April 1977. The quantity supplied in April and May ranged from 105 to 305 cusecs. 3.34 Collapse of Cofferdam. In November 1977 the Godavari River peaked at 180,000 cusecs compared to a normal expected flow of 15,000 cusecs in November. The flood collapsed a cofferdam and generally raised havoc with construction activities. It is conservatively estimated that one month's working period was lost. Maximum flood discharges during the flood season for the years 1975 through 1980 are given in Table 1. Construction Progress 3.35 Although everything possible was done during appraisal, negotiation and at start-up to meet the desired June 1979 completion target, actual completion of construction will be in June 1982 or three years later than scheduled. The project authorities expect to complete the barrage construc- tion by the end of calendar year 1981 and the highway bridge over the piers by June 1982. - 31 - 3.36 Construction progress following award of contract on the civil works in 1975 was considerably less than scheduled. NPCC was to complete construc- tion of 24 bays (47 to 70) up to pier level in the Dowlaiswaram arm by June 1976 but could complete only 9 bays even though the work was continued till 8th July 1976. A coffer dam was formed by the Department in April 1976 to enable the Corporation to complete work on the 24 bays (47 to 70) by June 1976. As the corporation completed the work on only 9 bays in full and in 3 more bays only partly, the coffer dam formed at a cost of Rs 0.6 M for enclosing the working area beyond the 12 bays proved wasteful as it had to be relaid in the next working season. Work on the Vizzeswaram arm was, also, entrusted to the NPCC in December, 1975 with 10 bays to be completed in the 1975-76 season and 10 more bays in the 1976-77 season. A coffer dam formed by the Department in March 1976 for a length of 200 metres to cover ten bays (1 to 10) at a cost of Rs 0.44 M was, also, wasted as no bay was taken up for construction in this construction season. Only a portion of the work relating to the left abutment was done (value of work done was Rs 1.35 M against a total of Rs 9.66 M of work to be done). In the 1976-77 season, work on 5 bays only was done. 3.37 The extra work caused by the failure of the old weir in July 1976 monopolized construction activities during the working season from November 1976 to June 1977 and the breached coffer dam and flooding in November 1977 resulted in vital lost time in that next construction season. Unfortunately none of this lost time could be made up. Outside of 1976 and 1977 events which can be attributed to "force majeure", there were several contributing factors which could have received more or different attention. 3.38 First: the unhealthy financial condition of the prime civil works contractor: National Projects Construction Company (NPCC). Their operations on the project were from the beginning seriously hampered by insufficient capitalization and NPCC "being faced with unit costs under their contract that did not adequately reflect escalation since the time their bid was prepared. The Government of Andhra Pradesh (GOAP) was quite sympathetic to these difficulties as witnessed by the machinery advances of some Rs 14.43 M and mobilization advances to NPCC of Rs 16.0 M and about Rs 4.5 M to Andhra Pradesh's State Construction Company (APSCC)." 1/ 2/ 1/ Quote from April 11, 1978 Supervision Report. It has not been determined whether the difficulty referred to on unit rates is because NPCC quoted unrealistically low values in their bid or if there are deficiencies in the escalation clause which does not adequately compensate for increases in fuel, materials, labor, etc. It is safe to assume that essentially all contractors in India would be undercapitalized by Western standards and the only way this problem could be minimized would be by strict pre-qualification of potential bidders and/or by providing a mobiliza- tion advance under the tender proposal. Since a mobilization advance can be as much as 10% of the contract amount the advance of Rs 6.0 M in 1977-78, 5.0 M in 1979 and 5.0 M in 1979-80 is a modest sum. Although there was no pre-qualification screening or pre-bid conference in the civil works tendering through bidding process, the record shows that all seven firms who submitted bids "were well known and all were considered qualified to perform the work". 2/ Andhra Pradesh State Construction Corporation (ASPCC) later entered the construction picture as a subcontractor to the prime contractor NPCC. - 32 - 3.39 The second difficulty was "the inability of the construction manage- ment to adopt preventive measures to minimize flood dangers and damage arising from seasonal or flash floods particularly in November at the beginning of the construction season." Construction activities were fully dependent on coffer- dams and the work access road constructed annually below the existing weir. The loss of either did cause additional costs and delays. A proposal was made several times by IDA in the supervision missions that surplus capacity in the three canals be used to convey river flows around the construction site to wasteways downstream from the access road. It was felt that this would speed up the rebuilding of the coffer dams, which had to be done at the beginning of each construction season, plus reduce the flood threat to some extent. GOAP engineers, however, did not review the diversion of surplus water through the canals as a practical solution as the carrying capacity of the three canals would not exceed 15,000 cusecs at the most. While normal dry season flows were less, the unexpected flood discharges could be considerably more. The November 1977 flood for example which washed away the coffer dams was in the order of 200,000 cusecs. 3.40 The reason given for the negative action was that it would require notification to landowners and farmers along the waterways whose lands might be inundated, a warning and policing effort by district police and associated social inconveniences. The matter seemed to be taken lightly by Project officials who viewed it as the contractor's problem. 3.41 There is evidence that the construction access problem to the Project sites (work in the 4 branches was ongoing simultaneously) was not fully appreciated. "The contract document stipulates that the contractor would have access over the old weir or via excess roads to be constructed by him just downstream of the weir." This seems to imply that there would be no spilling over the weir and that this presumably would take place through the scour sluices. It had also been assumed that the dry season flow would be much smaller than actually experienced. The Maddur branch was spilling in both the 1975/76 and 1976/77 seasons and the Dowlaiswaram branch spilled in the 1977/78 season. The contractor was, therefore, forced to make use of bridges located many miles downstream and upstream of the work site." 1/ 1/ GOAP's retort to this comment from the April 11, 1978 Supervision Report was that: "the arresting of flow over the anicut is possible only for floods of a stage of not more than 3 feet over the anicut, but there again the problem to be faced is that the work areas on the bar under construction have to put up with higher water levels, causing further hardship to the construction in progress. Hence, even at the time of floods below the 3-foot depth, a balance has to be struck between holding up the water by raising the 3-foot shutters of the anicut to create dry conditions on the downstream of the anicut, or allow the shutters to be flat to facilitate low water levels at the main barrage work areas, depending upon the importance of the work in progress. As such the readymade solution for laying good access roads on the down- stream of the weir lies neither in utilizing the surplussing capacity of the irrigation canals nor in early construction of the sluices. A practical solution would lie in greater resourcefulness on the part of contractors in adapting quickly to the time-to-time changes by keeping in readiness different modes of access to be put to use according to the demands of the situation, as was demonstrated by M/S H.C.C. during their working on Dowlaishwaran arm in the year 1976-77. - 33 - 3.42 An earlier and accelerated schedule for construction of the sluices would have assisted in this problem. As it is the sluice gates at each of the head regulators to the three irrigation canals are some of the last construction items to be taken up. This reflects, also, a construction concept of working from the middle outward whereas access would have been facilitated by working on the ends first and working towards the middle and more difficult bays. 3.43 The inclusion of the PERT chart in the tender documents appears to have locked the contractors into an inferior construction approach. Following the monsoon rains, four separate arms have had to be cofferdammed, both up- stream and downstream. Access to the worksites has been by means of a road below the existing barrage which was constructed each season after the high flow period had passed. Thus, the first and significant part of each annual construction season involved the construction of cofferdams and access roads, seriously affecting the time available for progress of the main works." In hindsight, it appears that this method of construction was defective, causing foreshortening of the productive construction period, repetitive and costly construction and failure to facilitate construction progress in the ensuing year. While these failings were recognized by Project management and Contrac- tor, there was somewhat of a blind acceptance of the original construction PERT chart and unwillingness to consider modification in construction approach and management. 1/ 3.44 Uncooperative relationships between Contractor and Government officials appeared to be a contributing factor. "Even with the difficult construction conditions, the technical engineering problems are resolvable given sound and cooperative organization and management on the parts of the project and contractor officials. Unfortunately, the organization and management appears divisive rather than cooperative, with project and contractor officials 'stonewalling' each other. At the time of the mission, the crux of the confrontation was the contractor's firm belief that it has been taken in by a bad contract, and the project officials' adamant position 1/ GOAP's retort to this quote from the April 11, 1978 Supervision Report is that: "when it was recognized that the PERT ChartProgramme could not be adhered to and was totally inadaptable, the department set-up a special monitoring division under the direct control of the chief engineer, Go-Davari Barrage Project to exercise close monitoring of the daily programme/progress." The Pert chart, therefore, had no significance in the monitoring progress but whether or not an inefficient construction approach working on four arms concurrently was unduly imposed would require further scrutiny. - 34 - that the contractor had entered willingly and knowingly and had to suffer the consequences." 1/ 3.45 One major source of delay in the completion of construction was GOAP's slowness in approving a design change for the bridge over the barrage. NPCC proposed in November 1976 that prestressed girders be accepted instead of fabricated in-situ RCC girders. The alternative was accepted in principle but PWD was some two years or so in approving. The new design required a 30 cm cantilever on both sides of the piers but PWD was reluctant to permit that reduction in net opening under the bridge. 2/ Appointment of a Negotiating Committee 3.46 A committee was appointed on December 22, 1978 to consider claims from NPCC for relief under unit rates assigned under the contract. A copy of the order is appended. Failure to Allow for Local Competitive Bidding 3.47 It appears that nothing was contained in the Credit and Project Agreement to provide for Local Competitive Bidding (LCB) procedures on the smaller civil works contracts. It apparently was intended that all civil works including the head regulators and sluice gates for the 3 separate irrigation canals be contracted following ICB tendering. It was concluded, however, in March 1979 that ICB was not a reasonable approach and IDA accepted that it was prudent to allow LCB under the terms and conditions set forth in paras E(2)(b) and (c) and E(3) of the Project Agreement. The LCB 1/ GOAP's comment to this quote from the April 11, 1978 Supervision Report is that "in big contracts, as in the case of Godavari Barrage Project, it is always possible that there are certain difficulties in interpreting the conditions of contract by Department and the contractors, though both the agencies are working for the same purpose viz. early completion of the project. The department has to work within the framework of certain rules and regulations and the issues of disagreement with the contractors have to be solved within the framework of the rules and regulations of the State Government. As a government organization, it therefore cannot function as flexibly as a private organization. On the other hand, contractors tend to seek relief beyond the scope of the contract.01 2/ With regard to the reported delay in approval of the design change GOAP points out that: "work of bridge of the project is almost the last item of the barrage work. On account of practical considerations, the design of the bridge has been changed over from R.C.C. to P.S.C. The substruc- ture and piers of the barrage could not be completed within the original stipulated period due to various reasons including the breach of old anicut, constructional delays, etc. Consequently, the work on the P.S.C. bridge was also delayed. There was some time lag in finalizing the design of the bridge as certain design issues were under correspondence with the contractors and the contractors could not furnish the required information in time." - 35 - procedure for remaining work items was followed up to April 1981 when GOAP decided, without IDA's prior concurrence, to procure, manufacture, supply and erect radial gates for the 3 head regulators without tendering. A tender notice had been approved by IDA on December 31, 1980 but GOAP later decided, in the interest of time and ease of control, to proceed departmentally. Since the remaining IDA funds were fully disbursed in the 1980-81 construc- tion season, the eligibility of this last remaining construction item for reimbursement under the credit did not become an issue. Implications of the Delay in Completion of Project 3.48 As recognized in the appraisal report and the economic evaluation for the appraisal, the prime objective was to ward off a failure in the old existing diversion structure. Work had been started on the Ralli Arm, prior to IDA's involvement, in anticipation of the danger of failure. Unfortunately, the breach did not occur here but in the Dowlaiswaram arm, the largest of the 4 arms (70 bays versus 43, 39 and 23 in the Ralli, Vizzeswaram and Maddur Branches respectively). Once failure occurred the damage was done and the priority in the construction effort was of necessity to repair the breach by the next irrigation season. The urgency for completing entirely the new bar- rage was relieved somewhat since the risk that failures could occur on the other arm was lessened. The new barrage will provide a one meter higher water level than the old structure for diverting more flow into the existing canals. There will also be more positive control regulation with the new structure as the old type shutter gates cannot be reset until flows drop to a low level. The new gates are expected to store 50 M cum which can mature rabi crops in late March when river flow deficiencies now occur at a critical time in the plant's growth. The full impact of these benefits, however, may not be realized until the second phase work--the modernization of the Godavari Delta irrigation system is taken up. In summary, the most important benefit from the project was to establish as quickly as possible the integrity of the weir base so that rapid drops in diversion elevations into the three Godavari delta canals, such as occurred in 1976 would not be repeated. Having accom- plished this, there has been no great urgency on GOAP's part to complete the crest gates, scour sluices, head regulators and highway bridge across the structure. 3.49 At one time in the progress of the project, it was suggested that the disbursement percentages in Schedule 1 of the Development Credit Agree- ment be reduced so as to prolong IDA's involvement with the project until all construction work is essentially completed. This idea was dropped, however, and the June 1981 completion date for the credit was retained. Quality of Construction 3.50 From all visual appearances the quality of construction work has been outstanding. Each shipment of cement was given the 7-day strength test and the design mix was adjusted accordingly. Quality was consistently given a high rating in all supervision reports and GOAP engineers and contractors are to be commended for excellent work. - 36 - Project Coordination 3.51 A project engineer assigned by the Chief Engineer, Major Irrigation Works, was given overall responsibility for the project during implementation with two Superintending Engineers assisting. Design adequacy and quality control were the responsibility of CWPC (now CWC) of GOI. There has only been one change in Chief Engineer on the project since effectiveness and there was no change in Secretary at the State level up until December 1978. Construction Costs 3.52 As given in Table 2, the anticipated final costs of construction are Rs 610.6 M compared to estimated costs at appraisal of Rs 559.0 M. This is a very nominal overrun and at least Rs 53 M can be contributed to the repairs and other emergency costs brought about by the breach in 1976. Quantities of materials used in construction are given in Table 3. Disbursements 3.53 Disbursements were ahead of appraisal estimates at the beginning of project implementation but dropped behind in 1976 when the break occurred and from then on. The disbursement schedule was adjusted in April 1978 and revised periodically thereafter at each supervision mission. The record of disbursement against appraisal estimates is given in Table 3. Disbursement by credit categories was as follows: Disbursement by Credit Categories is as follows: Amount Allocation Disbursed at Reallocation As of Appraisal Dec. 1980 6/30/81 -------------US$ million------------- 1. Civil Works 1-a let on contract 23.4 30.0 32.531 1-b by force account 4.9 1.0 1.214 2. Equipment and Materials 13.7 13.0 11.255 3. Engineering and Supervision 0.6 0.6 0.00 4. Second Phase Project Preparation 0.1 0.1 0.00 5. Technical Assistance for CAD projects 0.3 0.3 0.00 6. Unallocated 2.0 0.0 0.00 Total 45.0 45.0 45.000 - 37 - 3.54 Category 1(b) was provided to cover works carried out between February and June 1975 before the main civil works contract "was awarded" and additionally for the dismantling of the crest of the old weir after completion of the new barrage (para 5.09 of SAR). 3.55 Category 4 was set up to finance the foreign exchange cost of prepar- ing a Command Area Development project for the Godavari Delta. The project was expected to be based on conjunctive use of groundwater and surface water flows so the US$100,000 was earmarked for the procurement of drilling equipment for groundwater exploration and for other sophisticated groundwater research tools. No requests for disbursement were received for this category although project engineers have prepared a proposal for a Second Phase Development Project. The proposed project, reportedly costing in excess of Rs 600 M, is under review at the State Level. 3.56 Category 5 was earmarked to finance technical assistance to GOI specifically in the preparation of aerial photographic maps of potential command areas to enable a better preparation of future CAD projects. No applications were submitted for reimbursement under this category. 3.57 Category 3 earmarked US$600,000 for financing monitoring equipment to be built into the barrage, for survey, drawing and calculating equipment for the project design office and for inspection and transport vehicles to be used on the project. No applications for reimbursement were made in this category. Compliance with Credit Covenants 3.58 The Project Agreement has three Financial Covenants: Section 4.01. Andhra Pradesh shall maintain records adequate to reflect in accordance with consistently maintained appro- priate accounting practices the operations and financial con- dition of PWD with respect to Part A and the Command Area Development Department of Andhra Pradesh with respect to Part B of the Project. Section 4.02. Andhra Pradesh shall: (i) have the accounts and financial statements (balance sheets, statements of income and expenses and related statements) of PWD with respect to Part A and the Command Area Development Depart- ment of Andhra Pradesh with respect to Part B of the Project for each fiscal year audited, in accordance with sound auditing principles consistently applied, by the Accountant General of Andhra Pradesh; (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year, (A) cer- tified copies of the said financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the - 38 - Association shall have reasonably requested; and (iii) furnish to the Association such other information concern- ing the accounts and financial statements of PWD with res- pect to Part A and the Command Area Development Department of Andhra Pradesh with respect to Part B of the Project and the audit thereof as the Association shall from time to time reasonably request. Section 4.03. Andhra Pradesh undertakes to make such arrangements as shall be necessary to levy and collect from beneficiaries of the facilities constructed under Part A of the Project all investment costs of the Project including interest of not less than 5% per annum thereon over a period of not more than fifteen years. 3.59 Section 4.01 required the maintenance of accounting records to appropriately reflect the operations and financial conditions of PWD. GOAP did an excellent job in this respect. All payments relating to the Project were centralized in the Project Authority's Pay and Accounts Office and all were pre-checked. Thus the Organization serves as the Chief Internal Auditor. As internal checking authority, it conducts cent percent check of all the claims including establishment bills arising in the project to ensure that payments are made in accordance with the rules and orders issued by competent authority and also to ensure that the expenditure is incurred only on esti- mates sanctioned by the competent authority. 3.60 Section 4.02 covers the customary audit requirements. The Pay and Accounts Officer for the Project forwarded all claims after payment, to be post audited by the Resident Audit Officer, Dowlaiswaram, who is the repre- sentative of the Accountant General, Andhra Pradesh. As responsibility for the statutory audit of the transactions rests with the Accountant General, the Resident Audit Officer sends monthly and other consolidated accounts on the project as may be required to the Accountant General and Government on behalf of the Chief Engineer who is the chief accounting officer. 3.61 The audits were regularly received from GOAP. In addition, the Comptroller and Auditor General of India prepared an audit report in August 1977 which was based on preliminary findings in the year 1971/72. The GOI audit report pointed out numerous faults, mistakes and inefficiencies many of which can be discounted to a large extent by the urgencies caused by the breach and the complexities of the task. Things appear much clearer in retrospect than at the time the actions are taken. GOAP had a Resident Audit officer who conducted audits on the project on a current basis. In general GOAP's accounts and audit set up were well organized and disbursement claims well prepared. The identification of irregularities in the audit process need not be interpreted that GOAP's performance was bad but more likely that the auditing process is working as intended. 3.62 Under Section 4.03 GOAP undertook to levy and collect all project investment costs including interest at not less than 5% per annum over a period of not more than fifteen years. This is an unusually high cost - 39 - recovery compared to other irrigation projects in India. Apparently, an amount of Rs 41.8 million has been assessed as a betterment levy in February 1981 and legislation is being introduced for the collection of a second por- tion, which will reportedly amount to Rs 100 million. Cost recovery under the betterment levy as measured by funds received in the State Treasury is not very satisfactory in India, Whether this method of assessing costs and securing cost recovery complies with the conditions of the covenant would be subject to legal interpretation. 3.63 Article III of the Project Agreement covers Management and Opera- tions of Project Facilities: Section 3.01. (a) Andhra Pradesh shall cause all works and facilities included in the Project or necessary to the proper and efficient operation thereof to be operated, maintained and repaired in accordance with sound engineer- ing practices and standards and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for that purpose. (b) Without limiting the generality of the preceding paragraph, Andhra Pradesh shall, under arrangements satisfactory to the Association, cause the barrage constructed under the r oject Lt be periodically inspected not less frequently than once every five years, in accordance with sound engineering practices and standards in order to determine whether there are any deficiencies or potential defici- encies in the condition of such structures and earthworks, or in the quality and adequacy of maintenance or methods of operation of such structures and earthworkds which may endanger the safety of such structures and earthworks. Section 3.02. Andhra Pradesh shall at all times during the execution of the Project stockpile such materials, and maintain such equipment, at the site of the existing weir, as shall be necessary to make emergency repairs to such weir. 3.64 With respect to Section 3.02, the new weir upstream of the old barrage should effectively safeguard against the emergency situation. There is however, a continuing maintenance need after each flood season to replace riprap that is washed away downstream of the old barrage. The provisions of Section 3.02 would, therefore, equally apply following completion of the pro- ject. With the new weir in place, there should be opportunities to utilize gabions, wire baskets or other means of reducing the annual requirement for replacing stones washed away from the downstream apron. 3.65 Since construction is continuing, the provisions of Section 3.01 are not yet applicable. In more recent project agreements, generally re- lating to dams, the States are being covenanted to: cause the structures constructed under the Project to be periodically inspected in accordance - 40 - with sound engineering practice in order to determine whether there are any deficiencies in the condition of such structures, or in the quality and adequacy of maintenance of methods of operations of the same, which may endanger their safety. To this end, (the State) shall propose to the Asso- ciation appropriate arrangements for the Association's review not later than one year before the expected completion of such structures. 3.66 The sections under Article II for execution of the project, with the possible exception of the issue in the 1980/81 construction season of contracting versus departmental construction on the one head regulator, were complied with in a commendable fashion. Cooperation between GOAP, Project and Bank officials was excellent throughout the execution of the project. A good working relationship developed and was maintained. The Bank's Performance 3.67 A total of 6 missions aggregating 40 man-days in the field were mounted. There was in addition a special IDA mission in August 1975 to assist in evaluating the bids for civil works construction, a mission in July and August 1976 to projects in Andhra Pradesh including Godavari Barrage to assist government agencies in establishing appropriate financial manage- ment, reporting and auditing procedures, and a number of emergency visits in 1976 when the breach occurred. None of the supervision missions were by Bank staff involved in the appraisal. Supervision of procurement matters was essentially continuous at the beginning and through the first two years of the project implementation. There was not much IDA could do to assist after construction got underway and the various problems developed. Supervision missions were more than a year apart but there is no definite evidence to show that more frequent visits would have eliminated or alleviated the problems. The problems which arose during construction were generally of an administrative, organizational or at least a non-technical nature and of a non-repetitive character which could not profit from external supervision. The April 6, 1978 letter to GOAP, which is appended, is exemplatory of the problems faced. Project Benefits and Economic Analysis 3.68 The economic feasibility of the project as actually implemented has been reassessed. All inputs and outputs of agricultural production have been valued in constant 1980 World Market Prices with due adjustments for ship- ping, local transport, handling and processing. Actual project expenditure and estimated cost to completion from 1975/76 to 1981/82 were used to derive economic project cost in 1980 rupees. 3.69 The damage that occurred to agricultural production following the break in June 1976 has been fully documented. The "ex post" internal rate of return is estimated at 60% (Table 5) compared to the 44% in the SAR, mainly due to higher real prices andlower O&M cost. The appraisal analysis used the O&M cost of the full system instead of incremental cost. See Table 5 for details.  Table 1 INDIA GODAVARI BARRAGE PROJECT Maximum Flood Discharge at Godavari Barrage - 1975 to 1980 Flood Level River over Dowlaiswaram Discharge Year Date Anicut in cusecs Feet Metres + 38.75 1975 11.9.75 51.65 15.75 1,186,575 1976 23.7.76 55.05 16.79 1,961,140 1977 25.8.77 49.85 15.20 920,092 1978 18.8.78 52.75 16.08 1,422,550 1979 7.8.79 50.80 15.49 1,082,349 1980 5.8.80 49.00 14.95 814,242 -42 Tuaft 2 INDIA GODAVARI BARRAGE PROJECT Project Cost Estimates and Eenditures (Rs in millions) Estimated Cost Amount proration of As Per Anticipated Spent Balance Increased Cost Overrun Appraisal Estims d up to to I/ Apr 1981 Estimate 2/Total or Description of Item Report Cost- 12/80 Coplt to Apr 1982 Estimate Cost Underrun Civil Works Dowlaiswaram Arm 85.80 132.36 118.46 14.40 18.6 151.5 65.7 Ralli Arm 38.50 16.05 47.11 (-) 31.05 19.7 35.7 (-) 2.8 Maddur Arm 29.00 36.44 38.93 (-) 2.50 10.1 46.5 17.5 Vizzeswaram Arm 55.10 107.39 51.59 55.81 28.3 135.7 80.6 Total Civil Works: 208.40 292.75 256.09 36.66 76.7 369.4 161.0 Mechanical Engineering Works 84.00 173.59 110.06 63.53 12.7 186.3 102.3 Engineering and Supervision 46.90 71.30 46.94 24.36 71.3 24.4 Technical Assistance to GOI for preparing CAD projects 7.20 - - - (-) 7.2 Preparation of II Phase Project 3.20 - - - (- Sub-Total 349.70 537.63 413.09 124.55 89.4 627.0 277.3 Physical Contingencies 64.70 35.82 28.87 6.95 35.8 (-)28.9 Estimated Price Increase 144.50 37.15 26.80 10.36 37.2 (-)107.3 Sub-Total 209.20 72.97 55.66 17.30 73.0 (-)136.2 Total Project Costs 558.90 610.60 468.75 141.85 89.4 700.0 141.1 1/ As given by Project authorities in April 1981 2/ Based on advice from GOT CECOPAIRS April 1982. Actual Cost is estimted to be Rs 700 M. As of April 8, 1981 the work remaining to be completed was as followso River Arms Dowlaishwaram Ralli Maddur Vizzeshwaram Total Major work items remaining Piers to be completed - - - 7 7 Barrage gates to be installed 13 - - - 13- (No. 26-38) Scour sluice gates to be installed 4 2 - 4 10 Head regulators (completion of contract awarded January 1981) - 3 - - 3 Abutments - - - 4 4a Bridge bays not yet spanned 36 45 23 39 143- (no. 35-70) (No. 1-43 (No. 1-23) (No. 1-39) plus 2 scour sluice bays) a/ Out of a total of 175 barrage gates b/ Out of a total of 201 bays Tim added cost of Rs 90M has been distributed by indexing costs shown in balance to complete column by 207. (assuming the project authorities' estimate was December 1979 price levels and by pro-rating the balance of the overrun on the basis of bridge spans remaining to be completed. - 43 - Table 3 INDIA GODAVARI BARRAGE PROJECT Quantities of Materials Used in Construction Work Done Total Up To Description of Item Requirements 31.3.81 Balance Sheet piles (in M.T.) 6,800 6,530 270 RCC for sub-structure (in cum) 188,200 177,700 10,500 RCC for superstructure ( " ) 93,200 79,000 14,200 Jeddy stone ( " ) 91,000 84,900 6,100 Rough stone dry packing ( " ) 14,800 1,600 13,200 Aggregates ( " ) 423,800 374,700 39,100 Steel (in MT ) 18,350 15,726 2,624 Steel for gates ( " ) 14,000 12,000 2,000 Cement ( " ) 121,000 106,800 14,200 Embankments (in cum) 477,000 131,200 - 44 - Table 4 INDIA GODAVARI BARRAGE PROJECT Disbursements during Project Period Actual Disbtrsements As A Percentage Accumulated Disbursement of IBRD Fiscal Year Actual Appraisal Appraisal Disbursement and Semester Accumulated Estimate Estimate Profile 1975 2nd 5.7 3.0 190 12.7 1976 1st 6.9 6.0 115 15.3 2nd 15.5 16.0 97 34.4 1977 1st 19.4 23.0 84 43.1 2nd 32.0 1978 ist 36.0 2nd 25.7 40.0 64 57.1 1979 1st 26.6 43.0 62 59.1 2nd 30.4 44.0 69 67.6 1980 1st 34.2 45.0 76 76.0 2nd 37.8 84.0 1981 Jan 31 40.2 Feb 2~41.0 march 42.0 April 30 42.4 May 31 43.0 June 30 45.0 100.0 - 45 - Table 5 INDIA GODAVARI BARRAGE PROJECT Economic Costs and Benefits Capital Incremental2/ Expected3/ Net Year Costs 0 & M Costs- Benefits- Benefits - - - - - - - -------------- Rs M i- - - - - - - -- - - - - - - - - 1 78.60 0 0 - 78.60 2 127.80 0 0 -127.80 3 114.30 0 0 -114.30 4 68.90 0 0 - 68.90 5 78.90 0 0 - 78.90 6 56.00 5.7 741.18 679.48 7 48.10 5.7 841.37 787.57 8 0 5.7 912.48 906.78 9 0 5.7 1,083.17 1,077.47 10 0 5.7 1,165.57 1,159.87 11 0 5.7 1,217.36 1,211.66 12 0 5.7 1,269.18 1,263.48 13 0 5.7 2,590.16 2,584.46 14 0 5.7 2,590.16 2,584.46 15 0 5.7 2,590.16 2,584.46 16-50 0 5.7 2,590.16 2,584.46 Economic rate of return = 60% 1/ In constant 1980 Economic Prices. 2/ It has been assumed that after probability of failure reaches 50%, agricultural production in the project area would adjust to rainfed conditions. 3/ Incremental benefits due to prevention of expected losses of agri- cultural production in case of barrage failure. - 46 - ANNEX 1 GOVERNMENT OF ANDHRA PRADESH ABSTRACT COMMITTEES - Constitution of Negotiating Committee to consider the claims of M/s National Projects Construction Corporation Limited, amounting to about Rs. 2.4 crores and also for revision of rates of contract for balance portion of civil works to be done by them in Godavari Barrage Project - Orders - Issued. IRRIGATION & POWER (PROJECTS WING) DEPARTMENT G.O.Ms.No.388 Dated: 22.12.1978 0 R D E R: The civil works of Godavari Barrage Project were entrusted to M/s National Projects Construction Corporation Limited, a Government of India undertaking, for a contract value of Rs. 18.218 crores. The work was com- menced by the said firm during December 1975 and as per the terms of the contract the work has to be completed by June 1979. M/s National Projects Construction Corporation Limited were putting forth several claims for the work already executed by them. 2. At the meeting held on 21.8.1978 by the Secretary, Irrigation & Power Department with the officials of the Government of India, Government of Andhra Pradesh and M/s National Projects Construction Corporation Limited, a suggestion was considered whether a Negotiation Committee consisting of Sarvasri A.P. Ranganatha Swamy, K.V. Subba Rao, former Chief Engineers of Government of Andhra Pradesh and Sri Parthasarathy, presently Member (Accounts), Andhra Pradesh State Electricity Board, be formed to consider the claims of M/s National Projects Construction Corporation Limited, amounting to about Rs 2.4 crores as well as their request for revision in the rates of contract for the balance portion of work to be done by them, as in their view, condi- tions have changed warranting such change and these conditions were not anticipated when the contract was concluded. 3. The Government after careful consideration have decided to appoint a negotiating committee as detailed below to examine the claims of M/s National Projects Construction Corporation Limited, amounting to about Rs 2.4 crores and also their request for revision in the rates of contract for the balance portion of civil works to be done by them in Godavari Barrage Project: (i) COMPOSITION OF THE NEGOTIATING COMMITTEE (1) Sri A.P. Ranganatha Swamy, Chief Engineer (Retired) Chairman (2) Sri K.V. Subba Rao, Chief Engineer (Retired) Member (3) Sri Parthasarathy, Member (Accounts), A.P.S. Electricity Board Member - 47 - (ii) TERMS OF REFERENCE: (a) To examine in detail and recommend to the Government of Andhra Pradesh all the claims of M/s National Projects Construction Limited amounting to about Rs 2.4 crores in respect of Agreement No. 2SE/76-77 entered into with M/s National Projects Construction Corporation by the Superintending Engineer, Godavari Barrage Construction Circle No. I for executing the civil works of Godavari Barrage Project; (b) To examine in depth whether the present rates of the Agreement referred to in item (a) above are not really workable in view of the changed conditions, as contended by M/s National Projects Construction Corporation Limited; and (c) If so, to recommend to the Government the reasonable and realistic rates which could be paid to M/s National Projects Construction Corporation Limited for the balance of work to be done by them under the contract and also to indicate the specific date from which the enhanced rates could be paid. (iii) HEADQUARTERS OF THE COMMITTEE: The headquarters of the Committee shall be at Hyderabad. (iv) REMUNERATION TO THE NON-OFFICIAL MEMBERS OF THE COMMITTEE: The non-official Members of the Committee shall be paid as indicated below, as was done in respect of similar Committees constituted by the Govern- ment of Andhra Pradesh in Irrigation and Power (Projects Wing) Department: (a) Rs 100/- (Rupees hundred) per day for each sitting; (b) Actual fare by plane or by Air-conditioned Rail travel for to and from journevs from the place of residence to the workspot at Dowlaiswaram and back to the residence, in relaxation of rule 13(I) of the Rules in Annexure VIII of the A.P.T.A. Rules; (c) Payment of T.A. & D.A. as is admissible to the highest class of officers in the State of Andhra Pradesh while on tour; (d) The official Member, who is in Goverment service will be eligible for T.A. & D.A. which were admissible under the Rules applicable to him. The Chief Engineer, Godavari Barrage Project shall be the counter- signing officer for the T.A. bills for the non-official Members of the Committee. - 48 - (v) TIME LIMIT FOR SUBMISSION OF THE REPORT OF THE COM4ITTEE: The Committee should submit its report within three months from the date of issue of these orders. 4. The expenditure is debitable to "533 - Capital Outlay on Irrigation, Navigation, Drainage and Flood Control Projects - A - Irrigation Projects (Commercial) Schemes included in the Fifth Five-Year Plan. M.H.45 - Godavari Barrage - S.H. (01) Direction and Administration. 5. This order is issued with the concurrence of Financial Adviser (Projects) vide his U.O.No.1056/F.VII(I)/78-1, dated 21.12.78. (BY ORDER AND IN THE NAME OF THE GOVERNOR OF ANDHRA PRADESH) C.N. SASTRY SECRETARY TO GOVERNMENT To The Members of the Negotiating Committee. The Chief Engineer, Godavari Barrage Project, Dowlaiswaram The Accountant General, Andhra Pradesh-II, Hyderabad. The Director of Accounts, G.B. Project, Dowlaiswaram The Deputy Accountant General (Projects), Vijayapuri North. The Financial Adviser (Projects), Hyderabad. The Finance & Planning (Fin.Wing) Department, hyderabad. Copy to: The Director, Department of Economic Affairs, Ministry of Finance, Government of India, North Block Secretariat, New Delhi - 110 011. The Chairman & Managing Director, M/s National Projects Construction Corporation Limited, Raja House, 30-31, Nehru Place, New Delhi - 110 024. FORWARDED BY ORDER ss SECTION OFFICER: Vp/81227 フもA 誠 …：