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CAG slams Odisha for signing MoUs without any guideline

Source : BUSINESS_STANDARD
Last Updated: Wed, Jan 23, 2013 20:11 hrs

The office of the Comptroller & Accountant General (CAG) of India has slammed the Odisha government for entering into MoUs (memorandum of understanding) with industrial houses without any policy or guidelines for assessing the need for industries.

The CAG which is conducting performance audit of commitments made to MoU signed companies on land, water and minerals, noted that pre-requisites for signing of MoUs with promoter companies was not prescribed.

Besides, monitoring mechanism on implementation of various commitments by both the state government and private promoters made in these MoUs was also not prescribed.

CAG pointed out that while MoUs were signed with some promoters, there were many other projects in state where no MoUs were signed. These included the ones being put up by Utkal Aluminium International Ltd, Mid-East Integrated Steel, Saraf Agencies Ltd and Dinabandhu Steel & Power Ltd, but land and other facilities have been provided to all.

"No record could be provided to audit by Industrial Promotion & Investment Corporation of Odisha Ltd (Ipicol), Odisha Industrial Infrastructure Corporation Ltd (Idco) and steel & mines department to the effect that due diligence has been exercised to examine the proposal of the promoters and benefit that would be accrued to the state and that would be extended to the particular project proponent before signing the MoUs”, G Chandraprakash, deputy accountant general, office of the accountant general-Odisha wrote to secretary (steel & mines).

The CAG has also faulted the state government for not choosing industrial promoters through competitive bidding.

"Neither any competitive bidding was made for selection of parties for setting up of any particular type of industries/infrastructure projects, nor any Request for Proposal (RFP) was issued. We further noticed that states like West Bengal, Gujarat and Karnataka are inviting RFP for setting up of industries in the state”, the letter added.

Audit scrutiny by CAG revealed that MoUs were signed based on suo-moto offers made by the promoters rather than on 'expression of interest' basis or tender process.

Due to such suo-moto offers by the promoters, interest of the state could not be safeguarded as the state was deprived of best investment proposals of different promoters.

CAG also pointed out the non-furnishing of detailed milestones to the government by the promoters.

"As per conditions of MoU, within three months of signing of MoUs, the promoters were to prepare detailed milestones in the form of annual break-up of the physical and financial targets to be achieved in consultation with Ipicol/Idco and furnish the same to the government for monitoring the progress of execution of projects. Review of 19 MoU files in steel & mines department revealed that in none of the cases the detailed milestones were furnished by the promoters. As a result, audit was unable to examine the physical progress against any set milestones”, it stated.



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