Kohima Smart City Mission: CAG highlights several deficiencies including improper planning

Kohima’s Smart City Mission (SCM) began on a journey to develop a modern urban landscape in line with the Smart City Guidelines. This vision included provisions for assured electricity supply from solar energy, efficient water supply with recycling systems, advanced sanitation, smart infrastructure, pedestrian-friendly pathways, and green buildings, among other essential features. However, a recent Comptroller and Auditor General (CAG) report spanning from 2016-17 to 2020-21 paints a concerning picture of the SCM’s execution.

The report uncovers a series of issues within the Special Purpose Vehicle (SPV) responsible for Kohima’s Smart City projects. It highlights significant delays in project completion, with only eight out of 61 prioritized works finished within the scheduled timeframe. Shockingly, 47 works had not even commenced by July 2022.

It may be noted that Kohima Smart City Development Limited (KSCDL) function as SPV in implementation of the SCM Kohima.

The SCM’s aspirations included robust SPV revenue models and program convergence with other government initiatives like AMRUT, JNNURM, SBM, HRIDAY, Digital India, Skill Development, Housing for All, and more. However, CAG revealed disparities in execution. The SPV projected 18 projects worth Rs 388.69 crore in its Smart City Proposal (SCP) under Convergence and PPP Mode. MoUs were signed in 2016 with Line Departments and private companies, yet only one project converged with the Power Department, and no revenue model attracted private participation.

As per Mission Guidelines, the Project Management Consultant (PMC) was mandated to prepare comprehensive reports, including Feasibility Reports, Preliminary Project Reports (PPR)/Detailed Project Reports (DPR), and considerations like Operation and Maintenance (O&M), Environmental and Social Impact Assessment, Revenue Projection, and Designs before project execution.

However, CAG found that Kohima’s Smart City plan failed to adhere to guidelines. Irregularities, including the absence of essential reports and improper procurement, came to light. The water supply project, allocated Rs 46.43 crore, faced issues such as: the PMC and KSCDL didn’t prepare Feasibility Reports for “Water ATM” and “Water Tanker” projects, leading to ineffective expenditures; the Board of Directors (BoD) approved water ATMs in February 2019 but omitted budget allocation for water tankers, breaching procurement rules. Therefore, it found that despite Rs 44.97 lakh spent, none of the water ATMs became operational. Quotations for the water tanker were collected without prior approval, further violating procurement regulations.

In accordance with the guidelines, the SCM was envisioned as a Centrally Sponsored Scheme (CSS) where the Central Government would allocate Rs 500 crore for each city, with an equivalent contribution from the State or Urban Local Bodies (ULB). However, CAG showed that the Government of India (GoI) released Rs 200 crore, with a deduction of Rs four crore (two percent) for Administrative & Office Expenses (A&OE).

The State Government initially contributed Rs 2 crore in 2017-18 and Rs 20 crore in 2020-21, falling short of the commitment. This resulted in a substantial Rs 178 crore shortfall, hindering the SCM’s progress and milestone achievements as outlined in the Smart City Proposal (SCP).

The management, according to CAG, has stated that the funding pattern for North Eastern and Himalayan States was modified by the GoI in May 2022, shifting to a 90:10 ratio (GoI:GoN share) while capping GoI’s overall financial support at Rs 500 crore. However, despite this revised funding structure, the State Government has not fulfilled its commitment made during the Smart City selection competition.

The sanction order from the Ministry of Housing and Urban Affairs (MoHUA) stipulates that funds must be electronically transferred to the Special Purpose Vehicle’s (SPV) bank account within seven days of receipt. However, CAG revealed that the State Government significantly delayed fund releases, ranging from 3 to 15 months, in violation of the Ministry’s directives.

Additionally, CAG found that the KSCDL made payments to three firms without deducting Tax Deducted at Source (TDS) on income tax, as mandated by the Income Tax (IT) Act, 1961 although none of these firms qualified for exemption. In response to this observation, the management explained in July 2022 that KSCDL had instructed the firms to submit Income Tax Returns (ITR).

Despite Ministry of Housing and Urban Affairs (MoHUA) issuing an advisory prohibiting funds transfer from the Special Purpose Vehicle (SPV) to government departments or agencies, CAG observed that the SPV transferred Rs 45.62 crore to DMA in three installments for the construction of two Multi-Level Vehicle Parkings (MLVPs) and funded Rs 74.56 lakh for the “Modification of Distribution lines and Street Lights” project whose Detailed Project Report (DPR) was prepared by the Department of Power Nagaland (DoPN).

Despite a 2019 directive to implement the Public Financial Management System (PFMS) modules, KSCDL issued cheques totaling Rs 4.41 crore between October 2019 and March 2021, deviating from Ministry directives.

CAG also found that the Integrated Command & Control Centre (ICCC) under IT infrastructure was implemented without SOPs by executing MoU with the concerned key stakeholders and the line departments. It found that the streetlights under ICCC project were fitted on the existing poles of DoPN without solar panels.

According to CAG, KSCDL also did not deduct payment for manpower whose services were not actually utilized which resulted in avoidable expenditure of Rs 17.05 lakh. It said that non-assessment of viability of the project before its implementation resulted in infructuous expenditure of Rs 85.57 lakh on Construction of Multi Utility Duct. Further, it pointed that lack of planning and inefficient management in procuring machineries rendered the expenditure of Rs 1.12 crore unproductive.

It also found that execution of works before ensuring land free from all encumbrances, installation of the Bio-toilets outside the ABD areas and non-preparation of feasibility report and DPR to assess the actual requirement resulted in idle and futile expenditure of Rs 1.03 crore.

Lackadaisical attitude of Project Management Consultants (PMC) coupled with injudicious utilization of high-cost human resources in supervision and monitoring of the projects by the KSCDL resulted not only in delays in completion of the ongoing projects and preparation of DPRs but also rendered the expenditure of Rs 3.95 crore to PMC unfruitful and unjustified, CAG observed.