The Chennai Metro Rail Limited (CMRL) on Saturday dismissed as false and malicious the allegations made by Tamil Nadu BJP President K Annamalai with regard to its Phase-I project in 2010 and said issuance of addendum led to savings of about Rs 250 crore.
The Chennai Metro, on the point of issuance of an addendum raised by Annamalai, said after the invitation of bids, the Centre issued a notification (May 5, 2010) regarding 'deemed export' benefits for projects funded by Japan International Cooperation Agency (JICA).
As per the notification, projects funded by JICA were made eligible for 'deemed export' benefits, meaning even if the manufacturing of products is done in India, the union excise duty exemption would be available to them, deeming them as if the products are exported to foreign countries.
"It is pertinent to note that this was not a specific policy change for this project and product but was a generic direction aimed to incentivize the local manufacturing in India for products being procured for projects funded under important international funding agencies," the CMRL said in an official release.
Local manufacturing of any product in India will reduce prices and save funds for the public procurement entity. "But since the tenders had already been floated by CMRL before this notification was issued by Government of India, the tender conditions needed to be amended to confer this benefit to the project and bring down the costs."
Accordingly, Addendum (No 4) was issued informing all the pre-qualified bidders of the availability of ‘Deemed Exports’ benefits to the JICA projects.
Also, another Addendum (4-A) was issued seeking full details of tax components in the bid submission to facilitate equitable tender evaluation.
"In this addendum, it was also made clear that for evaluation of the bid, basic custom duty would not be considered, contrary to the allegation that customs duty was added to favour a bidder. It has been also alleged that addendums were issued after the financial bid. It is incorrect and both the addendums were issued a minimum of ten days before the last date of submission of tender. This made the bid fair, by placing all bidders on an equal pedestal and incentivized the bidders to manufacture locally."
The addendum for conferring the 'deemed exports' benefits resulted in reduced cost for CMRL. At the time of invitation of bids for trains for CMRL, cost of one stainless steel car was about Rs 10 crore. Bangalore Metro had also awarded their bid at about Rs 10 crores per car at that point in time. "Due to the deemed exports benefits notification by the Government of India, CMRL was able to procure the rolling stock (trains) at about 8.57 crore per car. This has resulted in a savings of about Rs 250 crore to CMRL."
Tamil Nadu BJP president K Annamalai on April 14 alleged that "kickbacks of Rs 200 crore" had been channelled by a multinational company through two shell firms to "Chief Minister M K Stalin for DMK's 2011 election fund". He said he would lodge a complaint with the CBI, seeking a probe. The ruling DMK dismissed the allegation as "laughable, baseless and unfounded" and said legal action would be initiated against Annamalai.
Annamalai, referring to the DMK rule between 2006 and 2011, alleged that payments were received by the party as kickbacks from a company that won a bid related to the execution of Chennai Metro Rail Phase I project.
The BJP leader told reporters here that the Central government had notified a policy on May 5, 2010 stipulating norms for evaluation of bids submitted by foreign companies.
Days before the closure of bids for the project, an addendum was brought in and a "second firm" came up to the "first position", which won the bid, Annamalai alleged. The specific change made was withdrawn later, he had claimed.
Annamalai said that the mobility provider Alstom had been sentenced to pay $772 million as criminal fine to resolve foreign bribery charges by the United States government.
On Alstom, the CMRL said it is true that the bidder had faced penal actions towards inappropriate behavior. However, linking it to the procurement in CMRL is utterly false and malicious.
The CMRL said: "In the US case, wherein Alstom agreed to pay $772 million to resolve foreign bribery allegations, the order of the US Department of Justice clearly mentions that the bribery allegations were related to projects in Indonesia, Egypt, Saudi Arabia, the Bahamas and Taiwan. No project in India was implicated in that order."
If procurements by CMRL had been involved in such investigations, the concerned agencies would have approached CMRL for information.
"But there has been no such communication from any agency in this aspect. Hence the alleged penal actions on the selected bidder, Alstom, have nothing to do with the procurements by CMRL, which has grown into an organisation of great standing and repute."
The CMRL emphasised that the procurements undertaken by it have been based on fair and robust procurement practices. "All the allegations raised in this regard, undue favours, indictment in overseas cases and link with shell companies are wrong and misplaced and hence are denied in toto."
Chennai Metro Rail Project was a project funded by the Union and Tamil Nadu governments besides JICA.