Principal secretary defends selection of Jayaprakash Power Ventures for sand mining contract

Detailing the timeline of the policy, he said, "The sand policy came into force on the 5 September 2019. The government undertook a lengthy but effective process of collecting feedback to see the results of its implementation. Multiple issues like high delivery cost, lack of choice, server-related issues and deficiencies in quality were reported during the same. To formulate and implement corrective measures, a Cabinet committee was subsequently formulated. After five to six meetings, the committee prepared a draft of the recommendations. For transparency, the draft was made public for citizens to refer to and suggest any changes if necessary. A toll-free number (14550) was also provided to record complaints. A total of 589 responses were collected out of which 82 percent of them were in concurrence with the policy."

Gopal Krishna, while listing the benefits of the policy, said, "People can directly pick sand from a location of their choice in their own vehicle under this new policy. Previously, none of these choices were given to the consumers. The sand price has also been made uniform across the state. Online booking will no longer be mandatory."

"The MSTC, which is a third-party central government agency with prior experience in executing such contracts, was given the responsibility on 4 January to ensure that the process is implemented in a free and fair manner. The tender was floated on 8 January and the final date was declared as 25 February, which was later extended to 3 March. The sand mining tender process was heavily publicised by the agency so that anyone can bid," he added.

Speaking about how the government of Andhra Pradesh prescribed a strict set of guidelines for MSTC to abide by, Gopal Krishna emphasised certain guidelines which exhibited transparency in the process. He said, "The government prescribed a comprehensive set of guidelines - right from the minimum annual turnover to the credible experience that the company needed to show - every single detail was mentioned in the guidelines. After verifying the eligibility of the company by all these standards, the MSTC referred Jayaprakash Power Ventures Ltd for the project."

Responding to the allegations levelled against this choice, Gopal Krishna said, "The allegations that claim that the company isn't experienced enough, or that the company is set to earn Rs 2,000 crore from this contract, or that the agency is bankrupt are all baseless."

He said that one of the clauses in the tender document clearly stated that the company's net worth, as on 31 March, should at least be Rs 152 crores for the first package, Rs 238 crore for the second, and Rs 95 crores for the third. Hence, the claim that the company being bankrupt is false.

He mentioned another clause that stated that the company should have completed similar works in the past five years, apart from possessing the minimum equipment needed to execute the contract. The bidder should have excavated at least 31 lakh metric tonnes (MT) of earth in the last five years and nine lakh MT in one of the five years. These requirements show the experience and track record of the company, he said.

The government will also be holding an amount of Rs 120 crore as security, he said. He said that it is not possible for the company to earn Rs 2,000 crore out of the contract. The state requires two crore MTs and with the price capped at 475 per tonne, the total value on this contract is not more than Rs 950 crore, he said. Out of this, the company will have to pay the government Rs 765 crore. Therefore, the company is set to earn around Rs 72 crore, he said.

The government of AP went one step ahead to safeguard the interests of the citizens by including multiple penalty clauses in the contract, he said. For instance, the company will have to face a penalty in case of failure to pay upfront, operate at least 70 percent reaches, or maintain stocks during monsoons. The penalty amount will be deducted from the security (Rs 120 crores). Keeping the above in mind, it is abundantly clear that there is no scope for any individual to resort to malpractices and that the process was executed in a completely transparent manner, he said.