The lack of monitoring mechanism to minimise delay in project execution by the Rashtriya Ispat Nigam Limited (RINL) and interest-free advance payments to contractors against CVC guidelines has lead to the loss of Rs 156.02 crore, besides an additional expense of Rs 3,500 crore (approximately) over the years.
The startling revelation was made by the Comptroller and Auditor General (CAG) in its Performance Audit Report, which was placed before Parliament on Thursday.
It was learnt that in a long-term agreement with NMDC Limited for the supply of iron ore, RINL took up capacity expansion at a cost of Rs 8,692 crore (October 2005) from 3MT per annum to 6.3MT per annum in two stages (stage-I and II) with a completion target in October 2008 and October 2009, respectively.
However, the report revealed that RINL did not achieve the envisaged dates of completions in both the stages and surprisingly it was conferred the Navratna status by the Central government in 2010.
Due to the delay, the RINL board of directors placed a Revised Cost Estimates (RCE) of capacity expansion, amounting Rs 12,291 crore in July 2011, with a new target to complete both the stages in 2011 and 2012, respectively. “Despite prolonged time and cost overrun, the capacity expansion has not materialised,” CAG report reads.
Also, RINL had acquired 51 per cent shares worth Rs 361 crore in the Eastern Investments Limited in January 2011, which had six licences for iron ore and manganese mines in Odisha. However, RINL did not derive any benefit from this investment as all six licences expired and were not renewed by the Odisha government. “As the RINL has no captive mine of its own for acquiring ore and cooking coal, it would be exposed to the risk of paying higher cost for raw materials,” the report reads.
Not the least, delay in the commissioning of Power Plant-I resulted in additional expenditure on the purchase of power, amounting Rs 17.46 crore from January 2010 to November 2013.
On the context of meeting deadlines, the national auditor claimed that RINL did not give a timeframe to the consultant for furnishing its recommendation on the eligibility criteria and failed to monitor the expansion of work.
Meanwhile, RINL has promised to rectify the CAG observation and would make all attempts to comply with them.