What auditors say about projects

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In its annual audit reports (for the year ended March 31, 2011) tabled in the Assembly on Wednesday, CAG points out huge losses for PSUs, PWD’s ineffective implementation of Centrally funded groundwater scheme during DMK regime

The state’s 67 working public sector undertakings (PSUs), consisting of government companies and statutory corporations, together employing 2.79 lakh, has accumulated losses of Rs 33, 621.12 crore, according to the Comptroller and Auditor General of India.

In its report (commercial) for the year ended March 2011, CAG said the accumulated losses have gone up over the years from Rs 6,420.24 crore in 2005-06 to Rs 33,621.12 crore in 2010-11.

As per the latest finalised accounts, it said of 67 working PSUs, 40 PSUs earned a profit of Rs 592.09 crore and 23 PSUs incurred a loss of Rs 11,923.59 crore. During 2010-11, heavy losses were incurred by Tamil Nadu Electricity Board (Rs 10,294.64 crore) and all the eight state transport corporations (Rs 1,575.26 crore).

The major contributors to profits were Tamil Nadu Newsprint and Papers Ltd (Rs 149 crore), State Industries Promotion Corporation of Tamil Nadu Ltd (Rs 82.84 crore), Tamil Nadu Industrial Investment Corporation Ltd (Rs 52.82 crore) and Tamil Nadu Power Finance and Infrastructure Development-Corporation-Ltd (Rs 64.43 crore).

CAG remarked that some losses could have been avoided. “A perusal of the last three years’ audit report of CAG shows that PSUs incurred losses to the tune of Rs5,128.37 crore and made infructuous investment of Rs 542.98 crore,” it said.

Glaring anomalies in desalination works

Chennai metro water has come under attack from the Comptroller and Auditor General of India (CAG) for ‘shoddy’ implementation of its desalination projects.

In its annual audit report tabled in the Assembly on Wednesday, CAG faulted the Chennai metropolitan water supply and sewerage board (CMWSSB) for glaring anomalies, including non-preparation of feasibility report or detailed project report (DPR) in execution of the Minjur desalination project.

Refusing to buy the board’s reply that urgency and time constraint were the reasons for non-preparation of DPR, the CAG criticised the board for deciding to set up the plant on DBOOT basis even without exploring other alternatives.

The board should have studied comparative cost benefit of implementing the project by government funding/loans or through public-private partnership and it should have analysed the viable and economical options before taking the final decision, the report said.

The auditors also took strong exception to lack of provision for purchase of reduced quantity of desalinated water in the water purchase agreement entered into between the board and CWDL (Chennai water desalination limited).

As per the agreement, the board had to purchase 95 per cent of the contracted quantity of desalinated water throughout the year for 25 years even during periods of comfortable storage in the surface water sources of Chennai.

One of the startling revelations of the audit was that on commissioning of the desalination plant, the quantity of water treated in Red Hills treatment plant by drawing water from Red Hills reservoir was reduced to the extent of desalinated water received at Red Hills storage tank as the board had to purchase water from CWDL.

RTOs flout ‘major’ licence rules

The CAG report for the year ended March 2011 (DMK regime), tabled in the Assembly on Wednesday, opened a can of worms on incorrect grant of licences to persons under 18 years of age.

The audit has unearthed that incorrect issuance of licences to persons under 18 years of age had been rampant in RTOs in Chennai city.

The report has noted that non-mapping of the business rule for granting licence to persons below 18 years of age had led to incorrect grant of licences to undeserving persons.

In a random assessment during the audit, it was found that licences were issued erroneously to 78 persons under the age of 18 in eight offices, including six in Chennai zone - Ayanavaram, K.K. Nagar, Meenambakkam, Tambaram, Tiruvanmiyur, Tiruvallur - besides Vaniyambadi and Vellore.

As per the Motor Vehicles Act, no person under the age of 18 years should drive a motor vehicle in any public place, but may drive a motorcycle with engine capacity not exceeding 50 cubic capacity after attaining the age of 16.

The report said it was noticed while granting driving licence to applicants, who were under 18 years of age, the class of vehicle was indicated as “motorcycle without gear” instead of “motor vehicle with less than 50 cubic capacity”.

A transport official said: “We have now been instructed to issue licences to persons under 18 only if the vehicle (below 50 cc) was registered either in their name or their parents’ name.”

pwd lost adb funds due to estimate delay

The Comptroller and Auditor General of India has brought to light that undue delay by the state PWD in preparation of estimate for construction of a recharge structure had resulted in non-availment of Rs 3.3 crore grant from Asian Development Bank (ADB).

According to CAG, the government sanctioned construction of a sub-surface dyke to improve sustainable drinking water sources and arresting seawater intrusion in Paravanar River under Tsunami Emergency Assistance Project (TEAP) with `3.3 crore from ADB.

As the river fell under PWD purview, TWAD entrusted work to PWD. Initially, an estimate for Rs 3.3 crore was prepared by PWD and cleared by TWAD.

However, the design wing of PWD revised the design of the structure causing more delay.

TNEB rapped for not increasing power capacity

Tamil Nadu Electricity Board’s failure to increase its distribution capacity to match the growing consumer base has come under the criticism of the Comptroller and Auditor General of India.

The CAG said the number of consumers increased from 19.06 million in 2006-07 to 22.34 million in 2010-11 with corresponding increase in connected load from 39,893 MVA to 53,160 MVA.

The report said that against the ideal ratio of 1:1 between the connected load and transformation capacity, the actual ration was ranging from 0.60:1 to 0.64:1 during the year 2006-07 to 2010-11 indicating a wide gap in transformation capacity.

“This huge gap in transformation capacity led to overloading of the system resulting in frequent tripping and adverse voltage regulation with consequential higher quantum of energy losses,” it said.

“To augment the transformer capacity to the connected load of 53,160 MVA at the end of March 2011, an estimated addition of 2.73 lakh distribution transformers of various capacities would be required,” the report said, adding that the board had no plan either in the short-term or long-term to procure DTs on this large scale to reach the required level of transformation capacity.

The CAG said that the with a view to meeting the growing demand, to improve voltage regulation at the tail end and to reduce line loss, the board prepares annual transmission and distribution plan indicating the addition of new sub station. It said during 2006-11, the board planned addition of 335 SS but actually added only 235 SS.

“The delay ranging from eight to 53 months in completion of SS was attributed to delay in selection and handing over of land and procurement of power transformers,” it said.

groundwater scheme fails

The CAG (comptroller & auditor general of India) has rapped the state PWD (public works department) for ineffective implementation of the Centre-funded groundwater scheme ‘Artificial recharge of groundwater through dug wells scheme’.

In its annual audit report (for the year ended March 31, 2011), the CAG has observed that failure of nodal department (state ground and surface water research data centre –SGSWRDC) had resulted in non-achievement of the objectives of the scheme.

As per the scheme, subsidy would be provided to farmers for digging artificial recharge structures to improve groundwater level.

In TN, 12.5 lakh wells were proposed and a state-level steering committee (SLSC) and district-level implementation and monitoring committees (DLIMC) were constituted with the CE of SGSWRDC as nodal officer for monitoring physical and financial progress of the scheme and conducting awareness and training farmers. SLSC approved and forwarded 3.39 lakh beneficiaries out of 4.19 lakh identified by SGSWRDC and Nabard released Rs 109.45 crore for 2.93 lakh beneficiaries, the report pointed out adding that the lead banks credited only 106.15 crore to 2.81 lakh beneficiaries as the remaining names and accounts were found correct.

Worse, SGSWRDC reported in October 2011 that only 21,214 beneficiaries had constructed the ARS against the 2.93 lakh to whom subsidy was disbursed by Nabard, the CAG report said adding that as per the progress reports received from respective districts by nodal department, the remaining ARS were not constructed and hence the utilization of subsidy released to the extent of Rs 97.66 crore for the purpose cannot be proved.

The auditors also pulled up SGSWRDC among others for release of further subsidy to fresh cases despite poor progress in construction of ARS by those who had availed subsidy already.