CAG finds ₹387.49 crore security deposits wrongly released to contractors

It focused on the Narmada Valley Development Department, Mineral Resources Department, Water Resources Department, Commercial Tax Department (Registration and Stamps, and VAT), and the Energy Department.

Who it concerns: Government of Madhya Pradesh (specifically the Narmada Valley Development Department, Mineral Resources Department, Water Resources Department, Commercial Tax Department, and Energy Department).

What the auditor found

• CAG found that Detailed Project Reports for Micro Irrigation Projects were not based on actual surveys, leading to overestimation and excess provisioning.
• CAG reported that the Department did not levy penalties for delays in 15 projects, resulting in a potential penalty amount of ₹ 818.14 crore.
• CAG identified excess payments to contractors due to incorrect price adjustment calculations, totaling ₹ 85.76 crore.
• CAG noted an undue benefit of ₹ 1,074.33 crore to contractors due to the use of lesser steel quantity than estimated.
• CAG found irregular release of Security Deposits worth ₹ 387.49 crore to contractors in lieu of Bank Guarantees.
• CAG reported that the Pati Micro Irrigation Project became largely infructuous despite an expenditure of ₹ 109.01 crore due to increased lifting height.
• CAG identified an irregular payment of ₹ 7.30 crore towards price adjustment after the completion date.
• CAG found an undue benefit of ₹ 59.04 crore to a contractor for the Sleemanabad Carrier Canal work.
• CAG observed underassessment of anticipated royalty in mining leases, resulting in a revenue impact of ₹ 4.76 crore and ₹ 48.50 crore in different instances.
• CAG noted that Cess of ₹ 3.66 crore was not levied on 51 lease deeds.
• CAG found short levy of tax and duties across various cases, including ₹ 91.63 lakh (VAT), ₹ 8.73 crore (Registration/Stamp Duty), and ₹ 16.40 crore (Water Resources price adjustment).

Also in the document

• CAG reported that the omission of realistic annual O&M and power charges in Benefit-Cost Ratio calculations rendered three Micro Irrigation Projects, involving a total cost of ₹ 6,363.96 crore, financially unviable.
• CAG found that the Department extended undue financial aid to contractors by releasing Security Deposits of ₹ 387.49 crore in violation of contractual provisions.
• CAG noted that the use of incorrect steel quantity estimates resulted in an undue benefit of ₹ 1,074.33 crore to contractors.
• CAG reported that the Pati Micro Irrigation Project, with an expenditure of ₹ 109.01 crore, became largely infructuous due to an unjustified increase in water lifting height.