WBIIDC loan to HPL was against Act: CAG report

The West Bengal state government, in order to bail out the cash-strapped Haldia Petrochemicals Limited (HPL) against its liability to financial institutions (FIs), provided a Rs 55 crore loan through West Bengal Industrial Infrastructure Development Corporation (WBIIDC) in violation of the WBIIDC Act.

The latest report of the Comptroller and Audit General of India (CAG) pointed out that several activities of WBIIDC a body set up to develop infrastructure facilities and growth centres for orderly industrial growth in the state, has resulted in wasteful use of funds.

Without citing any reason, WBIIDC acquired 100 acres at a price of Rs 4 lakh per acre at Haldia (Phase II), when the available rate was Rs 3.50 lakh per acre, leading to an additional expense of Rs 50 lakh, said the CAG report.

Of a total available fund of around Rs 28.30 crore, WBIIDC could not spend Rs 2. 66 crore till March end, 2003, even as the corporation diverted a Plan fund of Rs 7.43 crore to meet its revenue expenses.

Poor fund management resulted into an avoidable interest burden of Rs 1. 06 crore during 1998-2002 as WBIIDC, instead of repaying the loans out of land premium proceeds received, parked it in bank deposits that earned very low interests.

The Corporation's investment of Rs 4. 68 crore became infructous, as the land filling of about 5 acres of land was done by ' good earth' instead of 'fly ash' which should have been the case , as the area was within 50 kms of a thermal power (Kolaghat Thermal Power) , as specified by Ministry of Environment and Forest, government of India.

In addition , the corporation incurred interest of Rs 2.40 crore up to march 03 on loan of Rs 4. 50 crore ( Falta Phase II) that accrued no benefit to the corporation .

Lack of coordination among the Corporation, the Commerce and Industries department and the Land and Land Reform Department (LLR) led to the escalation of cost by Rs 4.86 crore in the LPG bottling plant project at Uluberia.

Though reported to be complete , 5 out of 11 growth centers had incomplete roads, drainage, water supply etc.

Among others, WBIIDC not only failed to recover Rs 14 .76 crore towards land premium and development cost at different locations but irregularly waived assignments charges of Rs 1. 39 crore while transferring 19.07 acres from one private company to the other but also could not enforce penalty of Rs 52.17 lakh on Hindustan Development Corporation Limited as they failed to complete wagon factory at Kharagpur.