THIRUVANANTHAPURAM: An inquiry by the Comptroller and Auditor General (CAG) has exposed how the decision of the Kerala Shipping and Inland Navigation Corporation (KSINC), a state-run PSU, to build a sea-worthy vessel without studying the scientific and business angles of the venture cost the state exchequer dearly.
The CAG has also sought an explanation from KSINC, which is directly overseen by the chief minister, on the non-generation of revenue and additional expenditure.
Said the audit report, a copy of which is with TNIE, “The company could not get the anticipated business even when it hired a vessel. The venture was around Rs 53 lakh in loss considering the hire charges paid and income from transportation alone. While the company had already incurred a loss in a similar initiative, a proposal was initiated again to acquire a higher-capacity barge as an outer sea bunkering vessel.”
The CAG also found issue with the KSINC not utilising funds on time. Though the government released Rs 6 crore in March 2013 to the company towards the cost of the vessel, it was not utilised until December 2017. As per the CAG report, KSINC had the required funds specifically released by the government for stage payments amounting to Rs 6.13 crore as demanded by the contractor. However, the payments were released with a delay ranging from nine to 433 days.
The inquiry also said inefficient fund management in KSINC by not releasing payments as per the contractual obligations despite having government funds led to undue delay in the construction of barge. Against a 15-month deadline for construction, the barge remains undelivered even after 10 years.
“Since the vessel has not been delivered till date, no progress is seen. Venturing into a failed business model has resulted in creating an asset with public money with a cost escalation of around 20% and ultimately not finding any business opportunity as envisaged in the viability study,” said the report.
It said the KSINC sought government funds for projects without conducting scientific market or business viability studies and basing the entire project on a financial viability report prepared by KSINC officials that is not backed by concrete market operational data.
“The government releases funds without further analysis or seeking expert opinions, leading to idling of government or public funds in assets that are unable to generate revenue either to the company or to the exchequer,” said the CAG report.