Firms exploiting loopholes in PSU deals: CAG report

GSPCL, had entered into a Gas Sale Agreement GSA with Ahmedabad-based Gujarat Adani Energy Limited GAEL in December 2003 whereby GAEL was to purchase 20,000 Standard Cubic Meters per Day SCMD gas from Hazira gas field in the first month and reach to one lakh SCMD by the fifth month, gradually increasing the quantity by 20,000 SCMD each month. The supply was to begin from May 1, 2004, 8220;or any other date mutually agreed upon8221;.

However, CAG noted that GSPCL had been supplying one lakh SCMD gas from September 1, 2004 to GAEL on a temporary basis till April 1, 2005 extending the commencement day twice. It said during December 2004 to June 2005, GAEL took only 71.61 lakh SCMD gas as against the minimum guaranteed quantity of 1.21 crore SCMD. However due to extension of commencement day, GSPCL did not recover the minimum charges of Rs 2.70 crore from GAEL for the short purchase.

8220;Due to this reciprocal arrangement, failure to recover the minimum charges from the firm not only resulted in loss of revenue, but also defeated the purpose of such provisions in GSA,8221; CAG noted.

Similarly, CAG observed, SSNNL suffered a loss of Rs 19.78 crore after it had awarded work of installation and commissioning of five pumping stations for Saurashtra Branch Canal Pumping Stations of Sardar Sarovar Narmada Projects to Kirlosker Brothers Limited KBL a Pune based company, on a turnkey basis at a cost of Rs. 441,92 crore.

Industrial houses like Nirma Limited and Sanghi Industries too benefited from such irregularities by PSUs. CAG noted that in case of GMDC, 8220;post sales discount, incorrect working and deviation from normal practice resulted in excess allowance of discount8221;.