The Hindu Business Line : CAG report faults KSEB on SNC Lavalin deal

THE Comptroller and Auditor-General (CAG) has picked holes in the act of the Kerala State Electricity Board (KSEB) having chosen three hydroelectric projects in the State for renovation and the award of a related contract to SNC Lavalin of Canada.

In its report for the year ended March 31, 2005, tabled in the State Assembly on Monday, the CAG singled out "deviations from prescribed procedures" in the selection of the Pallivasal, Sengulam and Panniar projects for renovation. The tabling of the report brought to an end months of speculation on the nature of actual contents that had come to assume serious political overtones in the State.

The terms of the foreign loan for the renovation project have proved to be detrimental to the financial interests of the KSEB. Neither could the objective of improvement in efficiency of machines and generation of power be achieved, the report said.

There have also been instances of avoidable payments of Rs 33.20 crore towards consultancy fee, commitment fee and exposure fees. The State Government did not receive the Rs 89.32 crore out of the grant of Rs 98.30 crore agreed by the supplier to be provided for the Malabar Cancer Centre as part of the renovation contract.

The expenditure of Rs 374.50 crore incurred did not yield commensurate gains due to technical defects in the equipment renovated. The very objective of improvement in power generation could not be achieved since there was no improvement in the efficiency of the machines, the report said.

The CAG report also cited an instance of inaction on the part of the Government in taking a decision in on energy charges recoverable from a private consumer firm, despite directions from the court. This resulted in non-realisation of Rs 14.27 crore and an interest loss of Rs 6.39 crore.

SupplyCo flayed: In other findings, the CAG report said the Kerala State Civil Supplies Corporation (SupplyCo) had failed in fulfilling the objectives as the prices of commodities supplied were far higher than the market prices. The company had generally relaxed quality parameters and had proceeded to accept infested commodities.

The present system of sales accounting has poor access controls and the database was found to be plagued with inaccuracies leaving the system at the risk of being manipulated to cover up theft, pilferage and embezzlement. The CAG rapped the Kerala State Construction Corporation for its failure to execute work in time, which led to non-recovery of actual annual average establishment overheads and also to termination of 14 works worth Rs 18.20 crore by the client.

There were 14 other cases of loss amounting to Rs 205.41 crore by Government companies and statutory corporations on account of faulty planning, failure to discharge contractual obligations, non-realisation of dues, undue benefit to contractors/suppliers, non-achievement of objectives and injudicious procurement.

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