The Hindu : National : Lalu orders CBI probe into sleeper purchase

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Thursday, Sep 09, 2004

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National

Lalu orders CBI probe into sleeper purchase

By Our Special Correspondent

NEW DELHI, SEPT. 8. The Railway Minister, Lalu Prasad, has picked up two official reports to order a Central Bureau of Investigation (CBI) probe into the purchase of concrete sleepers.

The first one by the Comptroller and Auditor General of India (CAG) noted certain lapses in judgment and that the Minister of Railways approved the tender committee's recommendations on July 31, 2001.

Two years later, the Ministry defended its actions but the CAG was unimpressed and held that the Railway's suffered a loss of Rs. 31 crores as result of the purchases.

The second report is by the Parliamentary Standing Committee on Railways and pertains to tenders floated in 2003 in which the Railway Ministry allegedly blocked attempts by new companies to enter the concrete sleeper business.

On both these occasions, the Railway Minister was Nitish Kumar, Mr. Prasad's rival in Bihar.

New firms kept out

One of the four companies alleged to be involved in cartelisation and ensuring that new companies were kept out of competition allegedly belonged to a businessman-cum-politician who was a member of Mr. Kumar's Samata Party. He died last year.

The Standing Committee notes that in 2003 orders were placed only on existing firms and no order was given to new companies.

The panel felt that a ``lot of unscrupulous existing manufacturers have formed a cartel to secure orders by unfair means or tampering with procedure and simultaneously keeping new competitors out of the race.''

It said the railways itself had to transport the sleepers from one zone to another because there were regional imbalances in the location of the units and new companies were kept out from setting up manufacturing units in uncovered areas.

The committee recommended that the procedure of purchasing concrete sleepers be streamlined and regional imbalances addressed immediately.

It also wanted the losses suffered by the railways to be probed by an ``independent agency.''

Financial burden

Though the other case was vigorously defended by the Railway Ministry, the CAG pointed out that the railways suffered a loss of Rs. 31 crores in one tender alone and would suffer additional financial burden in all future procurements because of what it thought was a ``faulty evaluation methodology.'' The tender committee conducted a fresh rate analysis for concrete sleepers and recommended rates that were higher than those worked out by the last purchase rate (LPR) method.

The Railway Ministry said ``the rate offered was realistic and therefore did not result in extra expenditure''. But the CAG differed: ``The accepted rate is much higher than the comparable over all price increase (between two tenders)'' and the ``failure to counter-offer the updated rate led to procurement of sleepers at higher rates resulting in (a) huge financial burden on the railways.''

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