The Government paid scant attention towards the recommendations of Finance and Law Departments and ignored its own port policy
The Odisha Government has come under scanner for having inked Memorandum of Understanding (MoU) for development of minor ports contrary to rules. Instead of taking recourse to international competitive bidding, Mr. Naveen Patnaik-led Government in the State opted for private developers for port projects, in gross disregard to norms and spirits of rules and guidelines.
The Government finds itself on a sticky wicket even as the Comptroller and Auditor General (CAG) has pulled up the State Government for undertaking development of minor ports violating various norms. In its latest report, the CAG has pointed out that the State Government did not constitute the Odisha Maritime Board, a body envisaged under the Port Policy 2004.
Four of the five port projects proposed under Public Private Partnership (PPP) mode were selected on suo motu offers made by private developers. The Government paid scant attention towards the recommendations of Finance and Law Departments and ignored its own port policy. It also did not go by the model concession agreement prescribed by the Planning Commission and Central Government guidelines on bidding process for PPP projects, according to CAG findings.
In the case of four of the five ports under question, though the project cost exceeded Rs. 500 crores, the concession agreements were executed without the required approval of the High-Level Clearance Authority.
The report also pointed out that of the five ports – Astaranga, Chudamani, Dhamra, Gopalpur and Subarnrekha – the competitive bidding route for the selection of private promoter was followed only in the case of Gopalpur.
“The views of the Law Department to go for competitive bidding as the same would be legally tenable and would ensure maximum participation and fair selection process, was ruled against. In the case of Gopalpur, a developer with no experience in infrastructure sector was selected and the revenue sharing was accepted at 0 to 7.5 per cent which was below the reserve percentage of five to eight,” said the report.
Significantly, the CAG noted that as the selection of developers for Astaranga, Chudamani and Subarnrekha ports were not routed through either the High-Level Clearance Authority, which is headed by the Chief Minister, or the Empowered Committee on Infrastructure chaired by the Chief Secretary, neither the issue of selection nor uniformity in concession agreements and timely execution of projects could be properly examined.
Besides, delay in obtaining environmental clearance resulted in delay in the execution of projects.
In the case of Dhamra Port, the commencement date was fixed after 13 months of the due date on the ground of delay in handing over of acquired land though the delay was attributed solely to the developer as land acquisition process in 66 villages lapsed because of non-payment of the compensation cost as well as delay in taking over possession of the acquired land by the developer despite repeated requests.
“This led to an extra expenditure of Rs. 30.86 crores. Because of the delay in execution of Dhamra Port, the Government was deprived of revenue share of Rs. 99.26 crores,” said the report.
It further pointed out that the provisions of the model concession agreement prescribed in January 2008 by the Planning Commission was not followed though the Public-Private Partnership cell of the Planning and Coordination Department treated it as a guiding document for preparation of such agreements.
Similarly, the concession period of three ports was allowed to be 34 years against the recommended 30 years in the model concession agreement and that too, without analysing the investment proposal, volume of traffic trend projections, operation and maintenance costs, revenue inflow, return on investments and the expected break-even period.
The findings recorded by CAG in its performance audit report were placed in the State Assembly on Dec. 15 and it had provided the Opposition to train its gun towards beleaguered BJD-led Government in the State.
“It sinks of a huge scam. We will go into the details and nail the Government whose public posturing in favour of ‘competitive bidding’ stands thoroughly exposed”, observed Congress leader and former Minister Prasad Harichandan.
The Odisha Government has come under scanner for having inked Memorandum of Understanding (MoU) for development of minor ports contrary to rules. Instead of taking recourse to international competitive bidding, Mr. Naveen Patnaik-led Government in the State opted for private developers for port projects, in gross disregard to norms and spirits of rules and guidelines.The Government finds itself on a sticky wicket even as the Comptroller and Auditor General (CAG) has pulled up the State Government for undertaking development of minor ports violating various norms. In its latest report, the CAG has pointed out that the State Government did not constitute the Odisha Maritime Board, a body envisaged under the Port Policy 2004.
Four of the five port projects proposed under Public Private Partnership (PPP) mode were selected on suo motu offers made by private developers. The Government paid scant attention towards the recommendations of Finance and Law Departments and ignored its own port policy. It also did not go by the model concession agreement prescribed by the Planning Commission and Central Government guidelines on bidding process for PPP projects, according to CAG findings.
In the case of four of the five ports under question, though the project cost exceeded Rs. 500 crores, the concession agreements were executed without the required approval of the High-Level Clearance Authority.
The report also pointed out that of the five ports – Astaranga, Chudamani, Dhamra, Gopalpur and Subarnrekha – the competitive bidding route for the selection of private promoter was followed only in the case of Gopalpur.
“The views of the Law Department to go for competitive bidding as the same would be legally tenable and would ensure maximum participation and fair selection process, was ruled against. In the case of Gopalpur, a developer with no experience in infrastructure sector was selected and the revenue sharing was accepted at 0 to 7.5 per cent which was below the reserve percentage of five to eight,” said the report.
Significantly, the CAG noted that as the selection of developers for Astaranga, Chudamani and Subarnrekha ports were not routed through either the High-Level Clearance Authority, which is headed by the Chief Minister, or the Empowered Committee on Infrastructure chaired by the Chief Secretary, neither the issue of selection nor uniformity in concession agreements and timely execution of projects could be properly examined.
Besides, delay in obtaining environmental clearance resulted in delay in the execution of projects.
In the case of Dhamra Port, the commencement date was fixed after 13 months of the due date on the ground of delay in handing over of acquired land though the delay was attributed solely to the developer as land acquisition process in 66 villages lapsed because of non-payment of the compensation cost as well as delay in taking over possession of the acquired land by the developer despite repeated requests.
“This led to an extra expenditure of Rs. 30.86 crores. Because of the delay in execution of Dhamra Port, the Government was deprived of revenue share of Rs. 99.26 crores,” said the report.
It further pointed out that the provisions of the model concession agreement prescribed in January 2008 by the Planning Commission was not followed though the Public-Private Partnership cell of the Planning and Coordination Department treated it as a guiding document for preparation of such agreements.
Similarly, the concession period of three ports was allowed to be 34 years against the recommended 30 years in the model concession agreement and that too, without analysing the investment proposal, volume of traffic trend projections, operation and maintenance costs, revenue inflow, return on investments and the expected break-even period.
The findings recorded by CAG in its performance audit report were placed in the State Assembly on Dec. 15 and it had provided the Opposition to train its gun towards beleaguered BJD-led Government in the State.
“It sinks of a huge scam. We will go into the details and nail the Government whose public posturing in favour of ‘competitive bidding’ stands thoroughly exposed”, observed Congress leader and former Minister Prasad Harichandan.
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