CAG Audit Uncovers Major Financial Irregularities in Goa's Sal River Project
The Comptroller and Auditor General of India has exposed significant financial irregularities in the Sal river desilting project in Goa. The audit reveals that the Captain of Ports department violated established procurement norms. The department made excess payments totaling ₹3.1 crore to contractors by awarding additional work without competitive bidding.
Project Overview and Initial Tenders
The project aimed to desilt an 18-kilometer stretch of the Sal river from the Telaulim-Varca new bridge to the river's mouth. Authorities divided the work into three phases of 6 kilometers each to facilitate free movement of vessels. The original tenders attracted competitive bids significantly below estimated costs, which initially appeared favorable.
Phase 1 launched in June 2020 with an estimated cost of ₹15.4 crore. The department awarded this phase to Vaibhavi Dredging at ₹8.5 crore, representing a substantial 45% reduction from the original estimate. The contractor completed the work in May 2021.
Phase 2 went to tender in June 2021. Western Dredging secured this phase at ₹12.5 crore, which was 19% below the estimated ₹15.4 crore. The contractor finished this work in April 2022.
Problematic Additional Work Awards
Following completion of Phase 1, the water resources department and the Dramapur-Sirlim village panchayat requested additional dredging work. In October 2021, the Captain of Ports department awarded additional work worth ₹3.9 crore to Vaibhavi Dredging on a nomination basis without inviting fresh tenders.
Similarly, after Phase 2 completion, government authorities forwarded resolutions from Chinchinim and Assolna panchayats highlighting urgent flood risks. The department then prepared an estimate of ₹4.5 crore for additional work and awarded it to Western Dredging on a nomination basis in September 2022.
CAG's Critical Findings
The CAG's February 2023 audit revealed these additional works constituted 47% and 36% of the original contract values for Phases 1 and 2 respectively. This far exceeded the 25% threshold that mandates fresh tendering under the manual for procurement of works, 2019.
The audit report clearly stated that "the cost of any additional work exceeding 25% of the original contract value of the work should undergo a tendering process." The report emphasized that "the works should be tendered instead of being awarded on a nomination basis."
More critically, while the original tenders were awarded at substantial discounts, the additional works were awarded at full estimated rates. The CAG observed that "given that the initial tenders were awarded at prices 45% and 19% below the estimated costs, the same principle should be applied to the additional work."
The auditors noted another irregularity. The department paid for mobilization and demobilization of desilting machinery despite initially claiming such equipment was already available at the site.
Evidence of Competitive Tendering Benefits
The audit further highlighted that Phase 3 of the project, tendered in December 2022 with identical specifications, attracted bids 37% below the estimated cost. This demonstrated that competitive tendering consistently yielded better rates for the government.
Department's Defense and CAG's Rejection
The Captain of Ports department defended its decisions in February 2023, claiming additional works were "more challenging tasks" requiring different machinery. In a September 2024 response, the department acknowledged accepting rates quoted by tenderers while maintaining that government approval was obtained for the nomination-based awards.
The CAG dismissed these explanations as untenable. The audit report stated that "there was nothing on record at either the proposal stage or in the additional work estimates that the additional work was more challenging or required additional machinery."
The CAG concluded that "the decision of CoP to award the additional works on a nomination basis was in contravention of procurement rules." The audit added that the "inability to adhere to the same terms and conditions as applicable to the original works led to an excess payment of ₹3.1 crore made to the contractors."
