Power Dept paid Rs 17.2 cr excess to M/s Techno Power: CAG

Power Dept paid Rs 17.2 cr excess to M/s Techno Power: CAG
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Kohima, February 16: In a startling revelation, the CAG of India has found the Power Department in Nagaland was involved in excess payment of Rs 17.2 crore for the construction of 220/132/33 kilovolt (kV) Substation at Chiephobozou about 20 kms in North Angami region of the State capital.
This was revealed in the report of the Comptroller and Auditor General (CAG) of India on Economic Sector of the Government of Nagaland (GoN) for the year ended March 31, 2018, a copy of which was tabled in the just concluded State Assembly by Chief Minister Neiphiu Rio, who also holds finance portfolio.
The CAG report stated that the performance audit on implementation of North Eastern Council (NEC) funded projects in the State covering the period from 2013-18 was carried our during April to September 2018.
The report stated that in August 2012, NEC sanctioned Rs 68.58 crore for construction of 220/132/33 kV substation at Chiephobozou (Part-II), Nagaland on 90:10 sharing basis (NEC Rs 61.72 cr and GoN Rs 6.86 cr) to be completed by July 2015.
Three firms had submitted their quotations for the said project and M/s ECI Engineering and Constructions Company Limited, Hyderabad submitted the lowest quote for Rs 52.61 cr, it said.
A further scrutiny in this regard, however, revealed that the said work for the supply and erection was awarded on turnkey basis to another firm, M/s Techno Power Enterprises (P) Ltd., Dimapur for Rs 52.61 cr which had not even participated in the bidding process.
The reasons for not awarding the work to the lowest bidding contractor and awarding the same to a contractor other than the firms which had participated in the bidding process were neither found on record nor furnished, though called for, the CAG pointed. Examination of records revealed that NEC released Rs 55.00 cr to the State and the GoN also released Rs 5.22 cr to the Executive Engineer (Transmission) Division Kohima. The Department incurred an expenditure of Rs 59.88 cr for the project, it said, adding that out of expenditure of Rs 59.88 cr, the Department paid Rs 31.81 crore for the procurement of five transformers and five different electrical items.
It said cross examination of the records with the tax invoices of the manufacturers and way bill/consignment note of transporter submitted by the supplier to the Taxes Department revealed that the actual price of five transformers and five different electrical items was only Rs 8.62 cr excluding taxes, freight and transportation charge, etc.
This indicated that the supplier (M/s Techno Power Enterprise Pvt. Ltd.) had procured the transformers and the electrical items from the manufacturer at the price of Rs 8.62 cr and paid the taxes, freight and supplier’s margin on the actual cost of the transformers and the electrical items.
The CAG after considering the supplier’s margin and transportation charges allowed by the Department of Power, Nagaland (DoPN) on the basis of the cost assessment submitted by the supplier and payments of the mandatory taxes such as Central Sales Tax (CST), freight, cess, Value Added Tax etc, worked out the admissible cost of the transformers and the electrical items to Rs 14.61 cr.
This, CAG said, clearly indicated that the DoPN did not exercise due diligence to satisfy itself of the reasonableness of the prices of the transformers and electrical items which resulted in procurement of transformers and electrical items at an exorbitant rate.
Thus, the DoPN paid Rs 17.20 crore over and above the admissible cost after admitting the transportation charges and the supplier’s margin along with payment of mandatory taxes with a malafide intention to commit fraud and to misappropriate Government money.
On this being pointed out in audit, the Government in December 2018 stated that the Department had evaluated the tendered price for the work on the basis of Engineering, Procurement and Construction (EPC) -Turnkey contract as a single package for the project as a whole and not on individual item-wise rates which was approved by the State Purchase Board duly constituted by the State Government.
However, the CAG remarked that the reply of the DoPN was not acceptable as bidding price and award of the contract was done by segregating the item of works.
The contention that the work was taken up on Turn-key/Engineering, Procurement and Construction mode, was also not pre-defined in the work order, it said.
The CAG of India recommended that the Government should investigate the matter and fix the responsibility on the officers/officials involved in the procurement process for making excess payment.
(Page News Service)