The Mangdechhu Hydroelectric Project Authority (MHPA) was implicated with unresolved irregularities worth Nu 246M, a joint audit between Royal Audit Authority (RAA) and the Comptroller and Auditor General of India revealed.
The initial audit observation involves irregularities of Nu 1.9B, of which Nu 1.69B were either fully resolved or not material enough for inclusion in the final report, based on the action taken by the project authority.
MHPA had made payments amounting to Nu 138M as interest free advances contravening the contract document. Consequently contractors, Jai Prakash and Gammon benefited Nu 69M each, the report stated.
The project has also made excess payment of Nu 29.95M to Jai Prakash for construction of dam due to non-deduction of interest free advances. The contractor also accrued a benefit of Nu 60M for the construction of dam because the project authority made an inadmissible payment as mobilisation and equipment advances of Nu 1.25B instead of Nu 1.19B.
The dam construction package awarded to Jai Prakash was supposed to be completed within 59 months from the date of commencement of the contract.
It was however, noted that the river diversion through diversion tunnels, scheduled for completion in February 2013 was delayed by four months. The construction of upstream and downstream cofferdams was also delayed by 14 months, which is scheduled to complete in August 2013. Riverbed excavation, foundation and treatment was supposed to complete in April 2014. This was also delayed by 15 months.
The dam concreting up to spillways crest was given 44 months, to be completed in November 2015. The project authority however, did not furnish the information on this.
MHPA also awarded Bharat Heavy Electrical Ltd (BHEL) with a supply of equipment and materials worth Nu 5.16B. The audit pointed out that BHEL appointed Bhutan Ventures Trading (BVT) as local representative for facilitating smooth execution of project at 1.35 percent of the contract value with financial implication of Nu 69.69M to the project.
MHPA is an inter-governmental project funded by the government of India on 70:30 debt to equity ratio.