Minor port developers provided less performance guarantee (PG) to the Odisha government for their projects than the amount prescribed under Model Concession Agreement (MCA), says a latest report of the Comptroller & Auditor General of India (CAG).
Clause 4.1 of MCA stipulates furnishing of PG equivalent to 5% of the estimated project cost to be given by the concessionaire to the concession authority during the construction phase.
However, the CAG during its performance audit of PPP (public private partnership) port projects found that the concession agreement (CA) of Astaranga port provided for PG of 1% against the 5% required under MCA.
CAs of Astaranga, Dhamra and Subarnarekha also provided for PG at 1% of the estimated project cost during the construction phase. In case of Gopalpur port, the state commerce and transport department had realized PG of Rs 20 crore which constituted 1.65% of the estimated project cost of Rs 1,213 crore.
As of September 2012, against Rs 133.09 crore due towards PG as per CA by four ports, only Rs 44.64 crore was given by two ports (Dhamra and Gopalpur), resulting in short deposit of the guarantee by Rs 88.45 crore.
As per MCA, Rs 626.08 crore was payable, while the same as per CA signed with the minor port developers worked out to be only Rs 133.09 crore.
The secretary (commerce & transport) stated that whether PG for five% would be reasonable or one% would depend on the size of the project and other circumstances. He further said in case of a greenfield port where investment and risks were much higher in order, less PG was agreed in the CAs.
The reply was not acceptable to the CAG which felt that adequate PG is required for providing safeguard against inefficient and improper performance including during the construction phase. Besides, gross amount of PG can be different depending on the size of the project and investments made but not the percentage value which should be uniform as per the MCA.
CAG has also rapped the state government for non-opening of escrow accounts in a bank by the private port developers despite provision in the MCA for the same. In the absence of an escrow account, the commerce & transport department was not aware of the amount of equity and debt inflow into the project, expenditure made and also booking of the expenditure of the project by the concessionaire of all the four ports.
