SNC Lavalin Controversy

The LDF government of Kerala has reversed the decision to have an enquiry conducted by the CBI into the multi-crore Lavalin scam ordered by the previous UDF regime. Instead the state vigilance department was asked to probe the case. Following this, there was a PIL in the Kerala High Court. The High Court has heard the matter and reserved it for orders.

What was the case about?

The Kerala government had ordered the renovation and augmentation programme at Pallivasa, Sengulam and Panniar hydel power stations (aggregate capacity 115 MW) in 1996. Then the Power Minister was Mr. Pinarayi Vijayan of CPM. The awarding of the project has run into controversy because the CAG’s performance audit of the program found fault with it. Neither the renovated power stations were generating power at least to the same level as that of pre-renovation, nor did the promised aid to the MCC (Malabar Cancer Centre) materialize.

History of the case: The three powers stations in the Periyar river basin with a total of 12 generating machines in the capacity range of 5 to 15 MW and installed during 1940 to 1964, were generating much below the design capacities for a variety of reasons. Therefore, an agreement was signed by the KSEB (Kerala State Electricity Board) with the Canadian project consulting company, SNC Lavalin in February 1996 for the supply of project equipment and related services under Canadian credit. Within a few months, the LDF came to power and the new Power Minister took the initiative in re-negotiating the price and other terms and conditions of the contract and also visited Canada for discussions in this regard before finally awarding the contract. Experts argue that the renovation and augmentation could have been done by local engineers of KSEB, leave alone national and international level players. When the project was finally executed in 2001, generation of power did not reach even the pre-renovation levels.

Political corruption: Experts argue that it was a clear case of political corruption. SNC Lavalin had promised to pay Rs. 98.3 crores to the Malabar Cancer Centre (MCC) as a reward for award of the contract to them at an estimated cost of Rs. 283 crores. The legality and transparency related to the promised payments by SNC Lavalin are being questioned. SNC Lavalin has reportedly. The Canadian company agreed to arrange Canadian aid to the tune of Rs.98 crores from various agencies including the Canadian International Development Agency, but has not arranged the promised amount. The cancer treatment centre will remain as a testimony to the miscarriage of the assurance about Canadian aid for its development, which formed part of the agreement between KSEB and SNC Lavalin.