CAG finds flaws in execution of plan

The report stated that MEP projects worth Rs11,812 crore were to be completed by October 2010 to expand the projects’ capacity from 2 MTPA to 4.5 MTPA.

Published: 12th August 2017 03:16 AM  |   Last Updated: 12th August 2017 09:22 AM   |  A+A-

By Express News Service

ROURKELA: Even as the CBI is probing the alleged irregularities in certain contract jobs in Rourkela Steel Plant (RSP), a report of the Comptroller and Auditor General (CAG) on implementation of Modernisation and Expansion Plan (MEP) in RSP has left the management worried.

The Performance Audit Report of CAG, indicating the SAIL Management, said, “There were deficiencies at each stage of the project cycle in project planning, tender finalisation, project execution and monitoring of MEP implementation.”

The report stated that MEP projects worth Rs11,812 crore were to be completed by October 2010 to expand the projects’ capacity from 2 MTPA to 4.5 MTPA. Till December 2014, the Capital Expenditure (CAPEX) was at Rs 11,682 crore for which the RSP had to forgo Annual Gross Margin (Net Sales Realisations minus Manufacturing Costs) of Rs 2,498 crore.

Owing to the delay, there were cost overruns while the SAIL and RSP failed to synchronise various production facilities. The civil and structural works of Continuous Casting Plant (CCP) and civil work of Basic Oxygen Furnace (BOF) were delayed by five years. It claimed that due to fault of the consultant MECON, there was error in the civil foundation of BOF causing a loss of Rs 1.55 crore to RSP, but the cost was not recovered from the firm.

Similarly, final project cost was increased by 70-80 per cent  and 23 MEP packages of RSP faced delay ranging from one year to three years. The report said packages for New Coke Oven Battery-VI, CDCP and Turbo Blower projects with an estimated value of `680 crore were finalised at a whopping Rs 1,035 crore without re-tendering.

The report also cited the observation of the Central Vigilance Commission (CVC), which had stated, “often post-tender negotiations are misused as a tool for bargaining by L1 bidders with dubious intentions.” One converter was ordered for `328.9 crore without competitive bidding against the estimated price of Rs 315.2 crore, it added.

On July 28, Nabarangpur BJD MP Balabhadra Majhi had drawn the attention of the Lok Sabha to the alleged irregularities in the RSP. Similarly, Union Tribal Affairs Minister Jual Oram in March had sent a letter to the Steel Ministry seeking an enquiry into charges of corruption.

Meanwhile, after recent breakdowns of two major new production units, the trade unions of RSP have renewed allegations of sub-standard work.

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