Kiran gives Rs.100 crore gift to GVK

Kiran gives Rs.100 crore gift to GVK
Sops to GVK cost state exchequer Rs 100 crore.

The TDP charge of nexus between GVK and Kiran has been proved once again.

Chief minister N.Kiran Kumar Reddy has doled out several concessions to the GVK group for the latter to snare the ‘108’ambulance services in the state in August last year. If the concessions are applied to the five-year period for which the MoU was entered into with the private operator, the revenue loss for the state would amount to at least Rs 100 crore.
Key documents pertaining to the GVK-state agreement clearly state that Kiran Kumar Reddy virtually pressured the officials to given into his orders and grant concessions to GVK in the ‘108’ project. While the finance department (file no.C.No.14233/K1/2010 dated 2-8-2011) had suggested that GVK should be given only Rs 15 per km as cost of operation, it was finally upwardly revised to Rs 18.32 per km. Similarly, while the finance department had fixed Rs 82,361 as total payment cost per ambulance per month, it was hiked to Rs 95,000 per ambulance per month.

As performance indicators, the health department has laid down strict parameters failing which the MoU could be cancelled. Thus, while the health department wanted GVK to attend to 50,000 calls on an average per day, it was finally reduced to 30,000 calls per day. Similarly, the average emergencies that should be attended to was reduced from 4,000 to 3,000 per day.

Another performance indicator is that at least 95% of the total fleet should be deployed on roads everyday. This clause becomes crucial for the state as it would be paying the private operator the operations costs for all the vehicles that have been listed. However, this was finally reduced to 90% of the total fleet. “By paying the operations costs of all the vehicles and agreeing to only 90% of them being on the roads, the state stands to lose vital revenue. However, in reality, in the case of GVK, of the 750 vehicles that are at its disposal, only 550 are operational. This means only a little more than 70% of the vehicles are on the roads. At a cost of Rs 20 crore per year for the next five years, the state will lose Rs 100 crore only because of this concession,” said sources.

In GVK’s case, the state also decided to do away with the concept of corporate social responsibility by which the operator had to bear five per cent of the cost of the project. In this case, the project is completely being funded by the state.

Opposing the move to award the contract to GVK, health minister DL Ravindra Reddy, who has been having a running battle with the chief minister on various issues pertaining to his department, had recommended for open tenders. “I have written twice on the file stating that the contract with GVK should not be renewed as the service is not good. I have recommended for fresh tenders as many bigwigs including Mahindra group, Piramal group and Ranbaxy came forward to operate the ambulance service,” DL Ravindra Reddy.

On August 27, 2011, finance principal secretary V Bhaskar wrote on the file: “The MoU appears to need re-working. For example, the computation in schedule B appears incorrect. Schedule E referred to in para 4.2.2.10 of MoU is missing. Para 4.2.2.16 refers to schedule F which is also missing.”

But overruling all the objections by different departments and allowing massive concessions to GVK, the chief minister on August 31, 2011 issued orders in favour of GVK. On the file, Kiran even recommended what were not recommended by the health and finance department such as payment of operational expenditure with suitable security mechanism in favour of GVK and also immediate release of funds for fleet refurbishment and replacement.