CAG Audit Uncovers Rs 298 Crore Unwarranted Spending in Maharashtra Road Projects
The Comptroller and Auditor General of India (CAG) has issued a damning performance audit report on the 'Improvement of Roads in Maharashtra through Hybrid Annuity Model,' highlighting significant financial mismanagement and procedural lapses. The audit, covering the period from 2018-19 to 2022-23, identified an unwarranted expenditure of Rs 297.97 crore and exposed multiple deficiencies in the state government's road development initiatives.
Key Findings of the CAG Report
The report, tabled in the Maharashtra legislative assembly on Wednesday, pinpointed several critical issues. A major finding was the specification for 'crust thickness' of flexible pavement, which was set higher than required based on projected million standard axles in Detailed Project Reports (DPRs). This over-specification led to unnecessary costs totaling Rs 297.97 crore across 18 packages.
Additionally, the audit flagged serious deficiencies in DPR preparation. These included lumpsum provisioning for utility shifting without component-wise estimates and the inclusion of an incorrect clause in the Request for Proposal (RFP) for DPR consultants, resulting in avoidable expenditures. In total, 78 DPRs covering 195 works were prepared at a cost of Rs 217.4 crore, with an unnecessary provision of Rs 5.55 crore made towards land acquisition activities that were never undertaken.
Issues with Hybrid Annuity Model Implementation
Prior to adopting the Hybrid Annuity Model (HAM), the state government relied on contractors for road development, with full payment coming from government funds. In November 2017, the government decided to develop 10,576 km of the total 90,608 km road length under HAM, with an estimated investment of Rs 30,000 crore—averaging three crore per km. This plan included a government equity share of Rs 18,000 crore (60%) and a private equity share of Rs 12,000 crore (40%).
However, the audit revealed significant implementation flaws. In three of the 42 packages reviewed, major road stretches intended for widening from single lane (3.5m to 3.75m) to double lane (7m) passed through forest areas requiring clearance. Work on these packages commenced without obtaining the necessary forest clearances, leading to de-scoping or inability to execute the projects.
Inspection and Monitoring Shortfalls
The CAG report also criticized the lack of proper oversight. Audit observations noted a significant shortfall in inspections by vigilance and quality control circles compared to departmental prescriptions. Targets for inspecting HAM packages were not fixed at the Chief Engineer, Superintending Engineer, or Executive Engineer levels.
Further delays were identified in the appointment of Independent Engineers (in 20 out of 42 sampled packages) and safety consultants (in 29 out of 42 sampled packages). Moreover, the department failed to appoint any Independent Engineers for monitoring projects during the Operation and Maintenance (O&M) periods of HAM works.
Financial Irregularities in O&M Costs
Unrealistic loading of insurance charges and patrolling expenses was detected in the O&M costs of the packages. The audit found that insurance charges were included as 0.15% of the estimated project cost in estimates, rather than based on actual premium payable. This practice resulted in excess insurance charges of Rs 34.56 crore in 17 out of the selected 42 packages.
Overall, the CAG audit underscores systemic issues in Maharashtra's road development projects under the Hybrid Annuity Model, calling for urgent corrective measures to ensure transparency and efficiency in future initiatives.
