Thiruvananthapuram: Two major projects of the Kerala Government are under scrutiny over alleged corruption and almost a similar pattern of outsourcing that likely led to inflated project costs.
The ambitious Kerala Fibre Optic Network (K-FON) project as well as the Safe Kerala Project on AI-based surveillance of road traffic are under a cloud over alleged dubious deals, inflated project costs, kickbacks and even political favouritism.
Bangalore-based firm SRIT, which has been engaged as the Managed Service Provider (MSP) of the K-FON project for five years in the second phase implementation, will earn a minimum of Rs 175 crore through the contract, reveal documents.
As many as six companies came forward expressing their willingness to join the project as its MSP. Among these, three companies, identified as SRIT, Cube Fibrenet, and Liteware Technologies were respectively short-listed in the tender as the top bidders. While the SRIT sought 10 per cent of the income, the other two companies quoted 11 and 12 per cent, respectively.
The K-FON tender was awarded to a consortium led by Bharat Electronics, which also comprised the SRIT. The consortium is accused of awarding a sub-contract to Presadio Technologies through another enterprise called Ashok Buildcon. Apart from SRIT, the consortium comprises Railtel and LS Cables.
Favourable tender provisions
The administrative sanction for the K-FON project was initially granted by calculating the Operation and Maintenance (OAM) cost for the first year alone, claimed authorities.
The tender, however, has been floated by estimating the OAM for six years after obtaining the administrative sanction in this regard, said Dr Santosh Babu, Managing Director, Kerala State IT Infrastructure Limited (KSITIL), who holds the charge of the K-FON project.
The OAM per year was estimated at Rs 104 crore. But the OAM tender was awarded for Rs 428 crore, which also includes a provision for Goods and Services Tax of Rs 65 crore and this led to a spurt in the project cost. This amount, however, is not paid by the State government or the KIIFB. Instead, the KSITIL itself is stipulated to repay Rs 5 crore every month from the K-FON revenues.
SRIT is the same private company which had earlier won the bid for the controversial Rs 232-crore AI camera deal. Presadio too is involved.
Earlier, Opposition Leader V D Satheesan had alleged a Rs 520 crore scam in the K-FON project, which envisages the provision of free internet for two million households besides 30,000 government offices.
The project cost for the K-FON project escalated from Rs 1,028 crore to Rs 1,531 crore, in violation of a directive by the Finance Department against escalating project cost beyond 10 per cent, he had claimed.
The pattern of revenue-sharing worked out for the project also points to such a possibility.
The revenue-sharing model
The K-FON is targeting an operational income of Rs 350 crore in the first year, of which 10 per cent will go towards the MSP. The K-FON officials, at the same time, maintain that the household connections are provided through other operators and hence the entire income is not received through the MSP.
If the revenue exceeds the target, the MSP will get an additional two per cent as an incentive. And if it helps rent out the fibre that lies underutilized (dark fibre), the MSP will get a further additional five per cent commission, they explained.
Similarities with AI surveillance project
The K-FON contract is alleged to have many dubious similarities to that of the controversial AI cameras deal when it comes to the tender amount. The K-FON contract was initially issued at an amount, which is 49 per cent higher than the figure bid. While the amount quoted was Rs 1,028 crore, the contract was finally issued for Rs 1,531 crore. This followed the interference of the then IT Secretary M Sivasankar, who is on remand in the Life Mission graft case.
Similar allegations were raised during the issuance of the contract to install 726 AI cameras for detecting traffic violations across the state. While the project cost was initially pegged at Rs 151.22 crore, the same rose to Rs 232 crore later.
The K-FON contract has a provision against sub-contracting the works, KSITIL authorities explained. But now it will be the SRIT that will be providing high-speed internet connectivity to all government offices and business institutions, besides extending free internet connections to 20 lakh BPL families in the state. They will also be entrusted with the maintenance work.
Similar is the case with the AI surveillance project. Keltron had won the contract but subcontracted the work to many others violating norms.
