The 13-year-old SNC Lavalin case remains one of Kerala’s biggest financial scams, and the CBI decision to seek prosecution of state CPM secretary and Politburo member Pinarayi Vijayan could impact even political and power equations here in days to come.

The scandal had its genesis in a 1996 agreement that the then Congress-led UDF Government got its Kerala State Electricity Board (KSEB) to sign with a Canadian power consulting company, SNC Lavalin. The contract was for replacing and modernising three major hydroelectric projects at Pallivasal, Sengulam and Panniar.

Soon after, Pinarayi Vijayan joined the Left Cabinet of E K Nayanar as power minister. Vijayan personally led the renegotiation of the earlier contract the KSEB had signed with Lavalin and subsequently went with Nayanar to Canada to seal the new deal. The new contract involved the state government agreeing to cough up an additional Rs 149.15 crore to Lavalin for buying equipment from suppliers it named — Lavalin itself manufactured no such equipment.

It did not take long for the deal to kick up a huge furore. It was soon exposed that by rooting for the Lavalin deal, the Left government had actually disregarded the recommendations of its own power reforms expert panel, headed by senior CPI(M) leader and former CITU national president E Balanandan, who died this month.

The Balanandan panel had clearly warned the state government that Lavalin’s costs were far too exorbitant and had suggested alternatives that it maintained were more effective and less expensive. This included getting the public-sector BHEL to take up the job at far lower cost.

... contd.