PANAJI: The CAG came down heavily on the department of urban development for causing a loss worth Rs 15 crore to the exchequer by setting up a plant in to convert waste plastic into hydrocarbon fuel, without any competition for the project.
The CAG report stated that the case didn’t fit into the model of a Swiss Challenge Mode, where an unsolicited bid is received for a public project after which third-party bids are invited to match or better it, as the government invited the proposal from the company after visiting their plant. It also found that financial assistance of Rs 12.5 crore (83%) of the project cost granted was in contravention of the guidelines by the ministry of that stipulate a maximum cap of 40% of the project cost for viable gap funding.
The CAG found that after department officials visited the plant run by MK Aromatics Limited at Alathur near Chennai, and based on discussions with the company, a note was submitted to the state government along with the concept report and proposal for implementation of the project in Goa.
The public private partnership cell of the Goa government examined the proposal and recommended inviting tenders under the Swiss Challenge Mode. Based on teh company’s detailed project report, the urban development department invited counter proposals from eligible bidders, but did not receive any response. The government approved the proposal and in November 2014, the department signed a concession agreement for setting up a plant at Pernem on design, build, operate and transfer basis at an estimated cost of Rs 15 crore for a concession period of 30 years.
The report found that the DPR of November 2013, based on which the department invited counter proposals, showed an outright capital grant in the form of viable gap funding and a soft loan aggregating Rs 12.5 crore to the company and a land parcel of about 8000 sq m on long term lease of 30 years.
“The company’s investment in the project was confined to Rs 2.5 crore. This vital information was however not disclosed in the notice inviting counter proposals thus depriving prospective bidders a level playing field and preventing competition and fair play,” the audit report stated, adding that royalty was the sole criterion for evaluation of bids. Had there been substantial disclosures regarding concessions being offered by the government in the notice inviting counter proposals, the government could have got a better royalty rate versus only two percent offered by the company.”
As of November 2017, even after being granted a construction license, the company had not installed the plant and machinery, and civil works in the respect of only two of the five blocks were completed up to plinth level.
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