Steel maker Rashtriya Ispat Nigam's (RINL) interest-free advance to contractors in violation of CVC guidelines has resulted in a loss of over Rs 156 crore to the company, government auditor CAG said today.
"Payment of interest-free mobilisation advance to the contractors contrary to CVC guidelines resulted in extending undue favour to contractors besides loss of interest of Rs 156.02 crore," CAG said.
Further, a delay in execution of a particular work resulted in avoidable expenditure on water charges amounting to Rs 25.89 crore during August 2009 to August 2014, it said. The company also incurred an avoidable expenditure of Rs 18.27 crore towards civil work of Seam Less Tube Mill.
Performance Audit Report on Rashtriya Ispat Nigam Limited (RINL) by CAG, tabled in Parliament today, also said the company did not achieve the Rs 12,291-crore capacity expansion programme despite prolonged time and cost overrun.
"RINL did not achieve the envisaged dates of completion of both the Stage-I & II of capacity expansion in October 2008 and October 2009...Board of Directors of RINL, while approving Revised Cost Estimates (RCE) of capacity expansion amounting to Rs 12,291 crore in July 2011, revised the envisaged dates of completion of both the stages to October 2011 and October 2012 respectively," it said.
It further said that "despite prolonged time and cost overrun, the capacity expansion has not materialised."
The corporate plan 2020 of RINL envisaged increase of steel-making capacity up to 6.8 million tonnes per annum (MTPA) by 2009-10, 8.5 MTPA by 2011-12, 13 MTPA by 2016-17 and 16 MTPA by 2018-19, it said.
"However, RINL's capacity expansion plan under examination in audit was for increase of capacity from 3 MTPA to 6.3 MTPA in phase II expansion," it said.
RINL took up in October 2005 capacity expansion at a cost of Rs 8,692 crore from 3 MTPA to 6.3 MTPA in two stages i.E. Stage-I and Stage-II with envisaged dates of completion in October 2008 and October 2009 respectively.
The report further said that RINL acquired in January 2011, 51 per cent shares worth Rs 361 crore in Eastern Investments Ltd, which had six licenses for iron ore and manganese mines in the State of Odisha.
However, RINL did not derive any benefit from this investment as all the six licenses expired and were not renewed by Odisha government.
