Odisha lost Rs 160 crore on loopholes in port concession pacts

Last Updated: Sun, Dec 16, 2012 23:00 hrs

The Odisha government suffered a loss of Rs 159.96 crore due to deficiencies in concession agreements signed with developers of minor ports, says the latest report of the Comptroller & Auditor General of India (CAG).

The CAG which conducted a performance audit of resources and revenue sharing arrangement on PPP (public private partnership) model port projects in the state, pointed out that longer concession periods were allowed than what is prescribed in model concession agreements (MCAs).

While the MCA had prescribed that the concession period should normally be fixed at 30 years, the same was allowed to be 34 years for Astaranga, Dhamra and Subarnarekha ports. This meant that the developer would be benefited by retaining the net revenue that would be earned during this extra four-year period.

The CAG report said that while the developer of the Gopalpur port was selected on the basis of competitive bidding process, the developers for other four PPP projects- Astaranga, Chudamani, Dhamra and Subarnarekha were entertained through MoU (memorandum of understanding) route based on suo-moto offers from these private companies.

The Central auditor has indicted the state government for making no effort to ascertain availability of other interested parties for these ports which can only be possible through competitive bidding process and wide publicity.

“In case of Gopalpur port, 14 bidders showed their interest when international competitive bidding (ICB) route was adopted. So, the government should have gone for ICB in case of Astaranga, Chudamani and Subarnarekha ports except for Dhamra port for which MoU was signed in March 1997 when neither port policy nor PPP policy was prescribed”, it added.

The CAG pointed out that the award of port projects at Astaranga, Chudamani and Subarnarekha to developers through MoU route was irregular.

The CAG rapped the decision of the government in approving selection of developer for Subarnarekha port through MoU route, overruling the views of the law department for competitive bidding.

While the finance department concurred the draft MoU for Subarnarekha port with modifications, the law department while vetting the draft MoU in December 2006 opined that out of two methods of participation- competitive bidding and MoU, competitive bidding route was legally tenable as there would be maximum participation and fair selection process.

Also, for Chudamani port, the state commerce & transport department adopted the MoU route even though the finance secretary had opined for competitive bidding.

The secretary (finance) had opined that the proposal to sign concession agreement by dispensing with competitive bidding without proper justification would certainly violate the provisions of Rule 18 of Odisha General Financial Rules and so, declined to vet the agreement.

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