CEA recommended (1992) that immediate replacement of the generating units of Pallivasal Power Station was not necessary, since the plant was in fairly good condition and suggested a new scheme of 60 MW as an augmentation of the existing scheme. Panniar Augmentation scheme to improve the water inflow and increase the power generation by 29.43 MU, was also underway (1995). Similarly, Sengulam Augmentation Scheme for additional power generation of 85 MU was also under consideration of the Board. All the above augmentation schemes necessitated uprating of capacity of generators rather than renovation. - CAG Report
KSEB We want to Replace generating units of Pallivasal Power Station No, They are in good condition (replied with suggestions 1992) Central Electricity Authority(CEA)
Some one still wants to Replace the machineries
SNC Lavalin and UDF - 1995 Dear Friends, Replace machineries your power plants; Get us some business But Mr Lavalin, We dont have money
SNC Lavalin and UDF - 1995 Dont worry, We get you money from Canada. We rule the country Then we can think of it. One more issue to over come. CEA told us not to replace machines. Liberal Party of Canada was ruling Canada that time. SNC Lavalin is one of the major corporate doner for the party. Government during that time in Canada became famous for several corruption cases – Ref: Various reports in Canadian media.
SNC Lavalin and UDF - 1995 Mr X will help you. He was your chief engineer earlier. He will become our consultant later Ok, deal is done...
August 10, 1995 - The MoU between the KSEB and SNC Lavalin was signed, when Mr. C. V. Padmarajan, was the Power Minister.
“ a Memorandum of Understanding (MOU) with SNC Lavalin Inc, Canada (SNC) for establishing a joint venture association for carrying out rehabilitation of existing facilities, identifying the three Hydro Electric Projects at Pallivasal, Sengulam and Panniar for the first batch of renovation. As per the MOU, finance for the renovation was to be arranged by SNC from Export Development Corporation (EDC), Canada and Canadian International Development Agency (CIDA). “
February 24, 1996 - The follow-up agreement was signed, when Mr. G. Karthikeyan was in charge of the Power Department.
“ Based on the consultant’s report and further discussions, contracts were signed (February 1996) with SNC for providing technical services for management, engineering, procurement and construction supervision to ensure completion of the projects within three years.”
The contract signed (February 1996) by the Board with SNC for technical services for renovation of Pallivasal, Sengulam and Panniar Power Stations provided for payment of a total service charge amounting to (Rs 24 crore) . The services to be provided were:
Preliminary and Detailed engineering
Preparation of drawings, specifications, bills of quantities and tender documents.
Calling for and evaluation of tenders and award of contracts.
Producing civil drawings
Review and approval of contractor’s design, drawings and other submissions
G Karthikeyan enters into agreement on Feb 24 1996
SNC Lavelin shall provide technical services for management, Engineering, procurement, construction, supervision and other services so as to ensure the timely completion of the Projects within the agreed time frame of three years. The amount of consultancy service charges provided in the agreement are:
1. Pallivasal 3.2 Million Canadian Dollar (Rs.7.96 crores)
2. Sengulam 2.669 Million Canadian Dollar (Rs.6.64 crores)
3. Panniyar 4.26 Million Canadian Dollars (Rs.10.6 crores)
(Data from HC Judgement;one Canadian Dollar equal to Rs.24.88)
Based on the consultant's report and further discussions, the Board signed contracts with Lavalin to provide technical services for management, engineering, procurement and construction supervision in February 1996, to ensure completion of the projects within three years. Agreement does not include the purchase of machineries and the total amount to be paid to SNC Lavalin was just 24 Crores .
Oct 12-23 1996 in Canada – hmm, pretty long trip ;)
Dont worry Mr Minister, SNC is our friend, you give purchase order to SNC, We give you money
Our common friend SNC is giving us consultancy to rehabilitate 3 of our power stations, but we dont have money for purchase machineries, can you help ?
Canada Meetings Come on....These are things which you can sort out; we will work it out separately
But how can SNC be given purchase order ? They are not manufacturer, just consultants. More over the prices listed are exorbitant
EDC allows for limited tender from companies in Canada; MoU1/Contract(UDF) allows for the same
Commission !!! “ The final contract for supply of equipment and engineering services was finalised by a Ministerial delegation directly with the consultant who was acting as an intermediary and was not the manufacturer. The supply of goods and services were actually made by other firms at much higher cost leading to extra avoidable payments.” (CAG Report)
May be we can promise a hospital in Kannur.May be a cancer center K Mohanachandaran, Principal Secretary, Power Good. Why not, let our friend, SNC, prepare a plan for that. Cheers ... Back to Kerala But what justification will I give to my people back at home for fixed price contract? Interesting suggestion ! How can secretary for power decide needs of health sector ? Was there any meeting held on this before or during the Canada visit? Planning for Hospital by an Engineering Consultancy firm ?
Feb 2 nd 1997 Balanandan committee submits report to Govt
Pallivasal Hydro Power project :
“ the proposals for the rehabilitation of schemes as approved by CWC&CEA for the construction of 40 MW new power station with new water conductor system at a suitable near by location which would obviate pumping for letting the tail race water to Sengulam Balancing Reservoir should be taken up without losing time”
“ this would enhance generating capacity of the scheme and provide a total peaking capacity of 77.5 MW”
Committee recomended this as most important short term project to be taken up as CEA has cleared proposal already and it should be completed in 3 years
CEA and Balanandan committee has created trouble, some how we need to get a stamping for the proposal of SNC. Let us form a committee to evaluate..
Subcommitee of KSEB evaluates rehabilitation and maintenance proposals for Pallivasal, Sengulam, Panniar, Neriamangalam and Sabrigiri
“ the price offered for these Projects on a per megawatt basis was higher that of Sabarigiri and Neriyamangalam. The Committee also opined that Consultancy and supervision charges are very high for those projects” (Ref: Report of the committee)
More trouble We need to get stamping for rates quoted by SNC. We have signed the agreement 8 months back. Let us go to NHPC Letter sent to NHPC on 10 Oct 1997. Agreement signed on 10 th Feb 1997
“ It was also seen that NHPC had not certified the reasonableness of the prices but had only stated that keeping in view of the soft loan with grant element, the purchase for Canadian equipment and accessories could be considered favorably. As the grant was not received there was hardly any justification as per NHPC’s report.” (Ref: CAG Report)
We haven't got the technical specification which are required to certify price given. However ...
Grant of ~ Rs 100 crore is part of the deal and since grant is not transferred to KSEB, GoK has to take steps to ensure that grant obtained.
--Jan 22, 1998
KSEB Secretary writing to Power Secretary, Government of Kerala “ the unique feature of this proposal (R&M of PSPHE projects) is the grant offered for setting up a Cancer centre at Thalassery in Kannur district”
“ that since the grant component is not coming directly to the Kerala State Electricity Board, the state government has to ensure that the promised grant for the Cancer center materializes”
“ M/S EDC has imposed a number of normal conditions for availing the export credit including Govt/Bank Guarantee for repayment of the loan and interest thereon, it is necessary that the government also binds SNC-Lavalin in some such agreements so as to ensure that the release of the grant for the Cancer center is done pari-passu with the rehabilitation projects”
As you would have understood by now, grant for Malabar Cancer Centre was an important component of MoU signed during Mr Pinaray's period. With out the proposed grant, contract with SNC Lavalin will be a huge lose for people of Kerala. Let us try to construct history with available information
In the story titled “Lavalin scam comes back to haunt Kerala”, it is said that:
In a letter written by Canadian High Commissioner Peter Walker to the foreign office on his meeting with the then chief minister EK Nayanar in February 2000, he said: “The CM announced that the CIDA was contributing $40 million to the project. The CIDA again reminded SNC-Lavalin and the Kerala government that funds of this magnitude would not be considered.”
The letter also said the CIDA had questioned the public assurance made by Nayanar that the CIDA would contribute $40 million as early as 1998. “The CIDA’s contribution to construction of hospital buildings and provisions of medical equipment would be conditional upon free access to services by the poor and the CIDA should receive a commitment to be obtained by SNC-Lavalin from the Kerala government that the government would cover operational deficit of hospital and assure that the long-term financial requirements of the hospital would be met.
Former minister, Sharma wrote: “According to the Para 2(1) of the Draft Agreement, as per the Project report it is the seen that SLI has only agreed to make all efforts for obtaining the full assistance for the project. This is a deviation from the clause in the Para 3(a) of the MOU that the full amount will be provided for the project. In this context, steps should be taken to enter into an Agreement in the time frame of the MOU by making necessary amendments, according to the clause 3(a) MOU to ensure that SLI provides the full amount” (SLI = SNC Lavalin)
Based on the available evidence, isn't it clear that SNC Lavalin, Mr Pinaray and some officials from KSEB robbed us.
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