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CAG pulls up NALCO for poor performance

However, it has been observed that the company failed to develop the captive coal block within the specified time and was re-allotted the block in September 2015 along with the Utkal-D block.

Published: 25th July 2019 01:29 AM  |   Last Updated: 25th July 2019 08:22 AM   |  A+A-

By Express News Service

The Comptroller and Auditor General (CAG) has hauled up state-run aluminium maker National Aluminium Company Limited (NALCO) for its sub-optimal operations and inordinate delays in developing coal mines allotted to it by the government, which had consequently resulted in a loss of earnings.

In its report tabled in the Parliament on Wednesday, the CAG stated that the company wasted an opportunity of earning contributions amounting to `1,086.63 crore because of lower aluminium production, by around 4.93 lakh tonnes, during 2012-13 to 2016-17.It may be recalled that the government had allotted Utkal E block at Talcher, Odisha to Nalco in 2014 to meet the additional requirement of coal for captive power production due to its capacity expansion from 960 MW to 1,200 MW. 

However, it has been observed that the company failed to develop the captive coal block within the specified time and was re-allotted the block in September 2015 along with the Utkal-D block. The work still remains incomplete due to various reasons including a delay in the submission of modified mining lease maps and non-appointment of a mining developer.

Consequently, production of aluminium in smelter plants also remained lower than respective capacities due to unavailability of adequate power supply due to the lack of enough coal. In the four years examined by the CAG, aluminium production saw a shortfall of 4.93 lakh tonnes resulting in a loss of earning to the tune of more than `2,000 crore, CAG pointed out. 

It also observed that the company incurred an additional expense of `326.62 crore towards excess consumption of coal in the captive power plant during the period under scrutiny due to higher station heat rate. Its failure to detect slippage of the quality of coal has cost it another `239.23 crore, according to the auditor.

The CAG also found fault with Nalco’s refinery and mining operations. Nalco had produced 96.31 lakh tonnes of alumina hydrate, primarily due to lower production of bauxite in the mines, as against a target of 107.35 lakh tonnes. The failure to maintain the required stock level of bauxite and the quality of feed resulted in excess consumption of both bauxite and caustic soda for which the company has to incur an additional `426.27 crore.

Raising concerns over deviations in complying with environmental norms, the CAG pointed out that the daily discharge of red mud and red mud pond effluent from the refinery was consistently higher than the corresponding limits specified by the Odisha State Pollution Control Board during the period from fiscal years 2012-13 to 2016-17. The government-run aluminium producer had also flouted norms in areas such consumption of excess fluoride per unit of aluminium produced and lower utilisation of fly ash generated in the captive power plant.

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