CAG pulls up 16 govt.-owned entities for governance lapses

The Comptroller and Auditor General of India (CAG), in a compliance audit report on central public sector enterprises, pulled up 16 government-owned entities for governance lapses that resulted in adverse financial implications of ₹3,437.30 crore, with Oil and Natural Gas Corporation (ONGC) and the National Highway Authority of India (NHAI) accounting for well over a third of these financial infirmities.

The biggest observation from the CAG’s report tabled in Parliament on Monday, pertains to what it termed an ‘imprudent decision’ by ONGC to acquire a 70% participating interest in a gas block despite its technical panel assessing that it had a mere 11.2% shot at success, leading to wasteful expenditure of ₹557.6 crore as well as a failure to recover the partner contractor’s share of ₹132.9 crore.

Apart from other lapses by ONGC worth almost ₹182 crore, the CAG has pulled up the NHAI for lapses worth almost ₹445 crore, including a case where it extended undue benefit of ₹203.1 crore to a consortium of contractors involved in four highway projects in Maharashtra.

The government’s audit watchdog pointed out infirmities amounting to ₹739.4 crore in the case of ONGC, and another ₹445 crore in cases where the NHAI had slipped up.

The audit report revealed 30 observations relating to 16 Central Public Sector Enterprises (CPSEs) under eight Ministries/Departments. The report highlighted the following:

• The National Highways Authority of India (NHAI) extended an undue benefit of ₹203.07 crore to Concessionaires after they failed to make any material progress on four National Highways widening projects in Maharashtra on Hybrid Annuity Mode, despite the damages being significantly lesser than the contractual provisions of the Concession Agreements.
• The contractor delayed the Raebareli-Banda section upgrade, resulting in lower user fee collection of ₹179.26 crore and a force majeure claim of ₹11.01 crore. The delay also caused premature distress of two Railway Over Bridges, causing traffic stoppage and delinking of bypasses, causing inconvenience to users.
• The Ministry of Road Transport and Highways (MoRTH) mandated FASTAG digital toll payment for all National Highway users, but failure of NHAI to recover double toll dues before expiry of concession periods caused a loss of ₹21.12 crore to the Consolidated Fund of India. Additionally, ₹63.03 crore of double toll dues remained pending for recovery from other concessionaires and toll collection contractors.
• The construction of a bridge due to faulty design, poor concrete quality, and overloaded vehicles resulted in an extra expenditure of ₹41.52 crore. The reported stated that the NHAI could have avoided this by ensuring proper supervision and prompt action.
• ONGC acquired a block with 70% Participating Interest, despite a 11.20% success probability. In November 2021, they surrendered the block to the Directorate General of Hydrocarbons due to low gas volumes after incurring an expenditure of ₹557.59 crore and failed to recover a proportionate share of ₹132.90 crore from the contractor.
• The improper acceptance of Turbine Generator materials without a service contract led to delays in commissioning and idling of materials, resulting in a delay in commissioning of one ₹35.02 crore generator and two ₹98.12 crore generators, despite a seven-year delay.
• ONGC faced delays in clearing imported consignments, leading to the absorption of demurrage charges of ₹58.74 crore out of a total demurrage payment of ₹110.61 crore from 2016-17 to 2021-22 due to operational issues and incorrect delivery orders.