Ministry accuses PSU chief of causing loss

Paswan is understood to have sought an explanation from the CMD. Refusing to comment on the allegations,Ranganath said,My conscience is clear,and I have not caused any deliberate losses to KIOCL. He denied any knowledge of the minister seeking his explanation on the matter. Making out a case for initiating stringent action against Ranganath,the ministry said the CMD purchased three shipments of low ash metallurgical (LAM) coke in July 2008 worth Rs 292.07 crore,well beyond his delegated powers. He is empowered to buy materials worth only Rs 10 crore. Singh said the CMD bought LAM coke at $712 a tonne,significantly higher than the prevailing price. This (purchase) has resulted in a loss of around Rs 125-150 crore to KIOCL for which the CMD is solely responsible, Singh claimed in his note. The ministry has now referred the issue to its chief vigilance officer.

Defending the CMD,a senior KIOCL official said LAM coke was purchased through an official mechanism in the nature of an empowered joint committee comprising SAIL,RINL and KIOCL representatives that decides purchases,approves the parties and finalises the price. This committee had approved the purchase in June 2008 while fixing the price at $712. The quantity procured was in line with KIOCLs requirements for 2008-09. One clause of the delegation of power says if the board is not in session,the CMD can take decision on a matter and take up the decision for ratification in subsequent board meetings. Since,the board was not in session,Ranganath assumed its powers,procured it and placed it for its consideration within two weeks after placing the orders. The issue of referring it to the CVO is the internal matter of the ministry and we dont know anything about it, the official said.

The ministry took strong exception in another instance to Ranganath seeking the board approval for endorsing a single tender of China National Metal Products IMP/EXP Company for implementing a ductile iron spun pipe project at Mangalore. KIOCL had floated a tender in January last. Of the five bids,four were found ineligible leaving the Chinese company as the lone bidder. This issue has now been referred to the Central Vigilance Commissioner.

Denying any impropriety on the issue,the KIOCL official said the DISP project was conceived in 1992 as blast furnace unit was uneconomical to run on a stand-alone basis. So tenders were called three times before 2008 and cancelled thrice. Twice,KISCO (now merged with KIOCL) could not raise the money and the third time it was cancelled because the party did not agree to the Notice Inviting Tender (NIT) condition.

The CMD also appointed valuers for disposing of KIOCL plant and machinery in an arbitrary manner,Singh said in his note. The CMD has not considered constituting a committee of board of directors to monitor this. Moreover,no reserve price has been fixed for the material, the ministry said. The PSUs official pointed out,We run the company and we do not have expertise for valuation. We appointed an approved valuer through a tendering process. They gave a value,which is the reserve price and with this valuation we are going for a tender and the highest bidder will get it. No circular or no delegation of powers says that there should be a committee of directors for this.