Kochi Metro will go to DMRC: But can this be a Precedent?

After so much uncertainty, the Cabinet at Centre finally gave approval for the proposed Metro rail project that covers 25 Kilometres and 23 stations, for the city of Kochi, Kerala.  The project is expected to be completed in four years, at a total cost of Rs 5,182 Crores. 

Even before the celebrations were complete, the controversy arose as to whether Mr E Sreedharan will be involved in the project.  Mr Sreedharan on his part again reminded Kerala through his statement to Media that he will associate with the project only if it is awarded to his erstwhile employers, Delhi Metro Rail Corporation (DMRC). 

The Media and even Opposition took up his statement and demanded assurances from Government that DMRC will be given the contract so as to involve Sreedharan in the project. As of today, the concerned Minister has informed the State Assembly that the project will be handed over to DMRC. No global tendering, no competitive bidding, no comparisons between interested and qualified contractors- no such formalities of transparent system of awarding contracts will be followed in this case. It is pre-agreed by the Government that the project will be granted to one particular contractor, i.e., DMRC which also happens to be the consultant who prepared all the project reports and estimates etc for the Project.

How and why did this happen? Instead of demanding adoption of transparent and competitive procedures in awarding the contract, the public opinion was managed to force the Government to gift it to a specific agency at a cost estimated by them alone!

There is no doubt Sreedharan has achieved a lot in the field of rail projects.  His role behind the success of Konkan Raliway and Delhi Metro projects is recognised nationally so much so that we even heard calls for his elevation to the post of President of India.  Since he is a son of Kerala, people of Kerala were always proud about his achievements and wanted him to be associated with Kerala Government in resolving the infrastructural issues of the State.

DMRC had implemented the Delhi Metro project satisfactorily and thereby gained sufficient experience in such projects.  It had the benefit of Sreedharan’s charismatic leadership as well.  However, there are various other companies set up within India for undertaking Metro rail projects.  Bangalore Metro is already partially operational, that too almost within stipulated timeframe.  While DMRC was involved in the consultancy stage with most projects, they were not granted the construction work in any other project.

It is true that DMRC is the best qualified domestic agency to implement the project. But the manner in which this appointment is being done leaves a lot to be desired. It is by now very clear that DMRC will get this contract not based on merit (tested against competitive bidding) but on the basis of pressure tactics.  Mr Sreedharan’s tactics in ensuring that the contract will go to DMRC is indeed questionable.  The fact that he is an advisor to DMRC makes it a clear conflict of interest for him while advising Government on Kochi Metro.

Government is left with no choice since DMRC, through Sreedharan, has succeeded in creating an impression in the public mind that the Government is trying to avoid them so that they can appoint some other parties with corrupt objectives! To say no to Sreedharan’s unreasonable demands would have meant that, in the eyes of public, the Government is seeking opportunity for corruption. Government meekly surrendered and is gifting the contract to DMRC, to keep Sreedharan and the public opinion, happy!

Kochi Metro is not the end.  It is the beginning. Sreedharan, and DMRC through him, is already involved in projects like Mono Rail and High Speed Rail line (HSR) in Kerala.  Their involvement in consultancy stage of these projects is without any competitive bidding and that itself is in violation of government rules of expenditure!   Sreedharan will continue to use the same tactics in those projects as well and with this precedent, Government will under more pressure to award the works to DMRC.

The DMRC with such an unchallenged monopoly can milk the State of Kerala to the extent it wants. 

Already there are allegations that the HSR project report prepared by DMRC does not consider the project risks or evaluates the technology but entirely depends on the Japanese assistance and technology.  The very fact that the Japanese technology is expected to cost Rs. 213 Cr/km while the same for Chinese (they have the most exhaustive HSR in the world) technology is something around Rs 165-180 Cr/km is also not considered. 

The entire logic for the Japanese technology was based on the assurance that Japan is ready to grant us loan at about 3% interest, that too with a moratorium period. What is left unsaid is the fact that, the Japanese loan is not in cash but as equipments, coaches, signalling, etc. which was more crucial for Japan to lift their sagging economy than it is to us! Are we to assume that funding of this level and character depends on the presence of one man or one agency than other globally recognised experts?

Even the State Planning Board (SPB) was reported as having serious reservations on the project that is expected to cost over Rs 1 lakh Crores! Yet each time the SPB was to meet, morning newspapers carried stories as to how the project is required for the State, complete with Sreedharan's statement and assurances.  

Same thing happened with Kochi Metro as well.  Whenever a meeting is proposed to arrive at any major decisions, Sreedharan comes out with his media statements that say his association is conditional on project being granted to DMRC.  Also, media was full of reports that suggested that Japanese funding would be conditional on DMRC getting the contract! With Government’s assurance in Assembly now we can conclude that DMRC and Sreedharan have succeeded in pre-empting any competition in Kochi Metro!

I hope the project itself does not come to a halt on account of any litigation against the improper allotment of the contract!  

But can this be taken as a precedent? Can a Government be forced to award contracts of major projects to certain companies or people based on media blitzkrieg or hyped up images? Can a Government in future say that since they think association of a particular expert is desirable, they are handing over the project to an agency chosen by him? Shall we do away with tenders and procedure where Sreedharan or similar charismatic persons are involved?

After all, Sreedharan is not even heading DMRC now. He is merely an Advisor to DMRC.  Without Sreedharan, there is nothing to suggest that DMRC will be anything but another contractor and that they will be able to deliver everything as promised.  Besides, DMRC has no previous experience in executing Mono Rail or HSR projects.  

Kerala Government must show some economic and administrative wisdom and should desist from putting all its eggs in one single basket. Let there be transparent competition involving the best players from throughout the globe and let the best party win the contracts.  Take the people into confidence from the beginning on the need to go for competitive bidding on a global basis so that there are no last minute pressure tactics by any one.  After all, people of Kerala can’t demand tomorrow to hand over the governance of the State to Mr Sreedharan, howsoever efficient and capable he might be!

Not individuals but the systems and processes must ensure efficiency and economy in implementation of any project.