Younten Tshedup 

The Royal Audit Authority (RAA) and Comptroller and Auditor General of India in a joint audit last year made eight observations for the Mangdechhu Hydroelectric Project (MHEP) in Trongsa amounting to Nu 1,392.413 million (M).

The observations were not resolved as of January this year. As per RAA’s annual report 2019, Nu 1,160.459M did not qualify for inclusion in the report.

The significant unresolved irregularities for MHPA amounted to over Nu 231M. More than Nu 208M fell under non-compliance to laws and rules as per the audit report.

Two contractors of the project, M/s Jaiprakash Associates Ltd. and M/s GECPL had furnished bank guarantee of over Nu 748M against the required amount of Nu 949.900M towards five percent (Nu 474.950M) performance security and five percent (Nu 474.950M) retention money as security deposit required by contractual provisions of the general condition of contract (GCC).

The bank guarantee was short to the extent of Nu 201.400M. The expenditure under work-in-progress civil structure dam for the year that ended on March 31 2019 was Nu. 9,499.600M.

MHEP had also made an excess payment of Nu 6.905M due to application of higher cost in rate analysis of rock bolt items.

The report states that the rate for rock support items was analysed including the cost for threading, marking and cutting of tip on lump-sum basis and the works were required to be carried out only once for each drilling.

However, MHEP had not analysed the rate correctly and the cost component was embedded and paid for every metre of rock bolts executed with resultant the excess payment.

The project also made excess payments of Nu 23.649 million (M) for the geological over-breaks in addition to the approved Nu 427.831M.

The payments for the geological over-breaks were approved based on the measurement submitted by the contractor, M/s GECPL.

The contractor had submitted a plea in June 2015 for the re-consideration of all cross sections of over-breaks on geological conditions including those that were not approved.

The project management had considered carrying out re-evaluation of the geological cross sections in July 2015. During the re-evaluation, measurement of over-breaks, those that were initially not approved, were admitted for payment and the contractor was compensated with an additional claim of Nu 23.649M.

According to the audit report, this was in deviation to Section B, 2.1.2 of the technical specifications for the geological over-break and unsuitable foundations.

More than Nu 25.839M was categorized under the case of shortfalls, lapses and deficiencies for MHPA.


Similarly, for Punatsangchhu-I hydroelectric project (PHPA-I) in Wangdue, RAA made 10 observations amounting to 148.670M worth of unresolved irregularities.

For non-compliance to law and rules, the irregularities for PHPA-I stood at Nu 32.760M.

The project had terminated a contract worth Nu 32.97M for the construction of a water treatment plant including its approach road to the project colony in Bjimthangkha.

As per the audit report, the termination was due to the inability of the former contractor, M/s Dawa Construction to complete works despite additional time extension.

After the termination, the work was re-awarded to M/s 2Q Engineering Works Pvt. Ltd. as per clause 63 of GCC of the agreement at the risk and cost of the former contractor.

The works were completed at a cost of Nu 13.73M against the awarded cost Nu 18.06M in September 2017. The risk and cost to be recovered from M/s Dawa Construction was estimated at Nu 4.530M by the project. The amount was not recovered till date of audit in 2019.

The project also made two avoidable payments of Nu 1.580M and Nu 36.840M on account of price escalation for the construction of a primary school building and residential complex for a 40-bed hospital at Jatshokha, Wangdue, respectively.

Under the shortfalls, lapses and deficiencies category RAA found irregularities worth Nu 115.910M for PHPA-I.

The project had made irregular reimbursement of accommodation charges of Nu 1.606M to the employees of M/s WAPCOS working at the project site.

PHPA-I had also made an overpayment of Nu 102.760M from incorrect computation of ownership cost in respect of machine hour rate.