Center seeks Andhra Pradesh government report on foreign loan of Rs 960 crore


Efforts to contact the Principal Secretary of Finance for clarification on the matter have not borne fruit (File)


The Center requested a report from the government of Andhra Pradesh on Rs 960 crore received in the form of loans from foreign agencies for various foreign aid projects (EAP) remaining unused.

The departments which are supposed to obtain these funds for the execution of the projects have gone blank, while payments amounting to hundreds of crore of rupees are still to be made to the contractors for the work carried out so far.

The EAPs remain today in the impasse because the State is unable to withdraw other amounts of loans from the external agencies due to the poor progress of the works and the non-clearance of payments (contributions).

The Department of Economic Affairs (DEA) under the Union Ministry of Finance took a firm position and wrote a letter last week asking for an explanation from the State Finance Department on the matter.

“The overall situation of the use of advances made by various authorities is not so encouraging, as a very large amount of advances is in the accounts of the government of Andhra Pradesh. As of September 7, the amount released as an advance amounted to $ 124.65 million, or approximately equivalent to Rs 960 crore, ”said the DEA in its letter to the Principal Secretary of Finance.

The DEA also noted that the use of the loan amount “is not that high”, indicating a “situation in which the cost of interest is increasing but the execution of the project is at a slow pace”.

In addition, DEA officials have personally called senior officials from different state departments and “told us about the sad situation,” a senior official said.

“We are bombarded with questions about the state of the work and the use of funds (put forward by foreign agencies), but our bulletin is filled with only blanks. They gave us money but we can’t tell them we don’t. have it, “observed the bureaucrat.

On the one hand, the state government rushed to get loans but, on the other hand, the guaranteed loans were clearly not being spent for their intended purpose, he told PTI.

Efforts to contact the Principal Secretary of Finance for clarification on the matter were unsuccessful.

There are currently 14 EAPs running in AP, with loans from foreign lenders like the World Bank, Asian Infrastructure Investment Bank, International Fund for Agricultural Development, Asian Development Bank, International Bank for Reconstruction and Development, Japan International Cooperation Agency, New Development Bank and KfW of Germany.

The DEA, in particular, mentioned six of these projects for which the ADB, AIIB, IBRD and IFAD have already released an amount of USD 124.65 million in advance.

The AP rural road project is a classic case.

The $ 666 million project was launched in November 2018 with a 70% loan ($ 455 million) from AIIB to provide road connectivity to unconnected homes of over 250 residents and rebuild existing roads in 137 rural constituencies. of the Assembly in 13 districts. .

Of the 6,323 km of roads proposed under the project, only 865 km have been completed to date.

A recent memo presented to the Chief Minister by the Panchayat Raj and the Rural Development Department stated that there were “no bidders” for 169 works although the tender notices were published four times. In some cases, offers were rejected due to proposed excess rates.

The note states that Rs 507 crore has been received from the AIIB so far and that an expenditure of Rs 405 crore has been incurred.

As of September 2020, Rs 341 crore has not been paid to contractors (on completed work) while invoices for another Rs 349 crore (performed) are to be increased.

According to the letter from the DEA, 43.35 million USD (approximately Rs 316 crore) should be available (with the State) as a balance (advance) on the total disbursement of 71.13 million USD.

The worst is the US $ 468.10 million PA Health Systems Strengthening Project, launched in 2019 with 100% World Bank assistance.

The medical and health department as such has obtained “zero” (money) from the project so far, although, for the record, it is still “on track”.

“What we do under the National Health Mission, we show it as under the World Bank project, because most of the work under the two programs is similar,” said a senior official. .

“It is another matter that our department does not even receive the funds from the NHM,” he lamented.

The DEA has warned the state to ensure that EAPs are “completed at a faster rate” by liquidating advances as the closing date in the case of four projects is very close.


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