The Hindu : Business : CAG pulls up Indian Oil Corporation

Online edition of India's National Newspaper
Wednesday, May 11, 2005

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Business

CAG pulls up Indian Oil Corporation

Special Correspondent

NEW DELHI: The Comptroller and Auditor General (CAG) has taken Indian Oil Corporation (IOC) to task for making over Rs. 145 crores of infructuous investments in branching and capacity augmentation of pipelines in the northern region. This includes Rs. 66.68 crores on augmenting the Kandla-Bhatinda pipeline and paying interest of Rs. 70.29 crores to the contractors owing to encashing the bank guarantee in excess of requirements.

In a report tabled in Parliament on Tuesday, CAG said lack of proper planning in capacity augmentation of the Kandla-Bhatinda pipeline led to avoidable expenditure of Rs. 66.68 crores. It recalled that IOC build the Kandla-Bhatinda pipeline at a cost of Rs. 1,853 crores with six million tonnes per annum capacity in 1996.

It first expanded the capacity to 7.5 million tonnes and then to 8.8 million tonnes in September 2002 .

The CAG said the actual throughput of the pipeline during 1999-2000 to 2003-04 ranged between 6.9 million tonnes and 5 million tonnes and remained less than even the original installed capacity. "Therefore based on the actual throughput performance of the pipeline, Phase II augmentation at the cost Rs. 66.68 crores, taken up in July 1998, was not justified," it said.

CAG also pointed out that encashment of the bank guarantee in excess of requirements resulted in payment of Rs. 70.29 crores towards interest.

In another case involving an increase in the pipe size of the Mathura-Tundla pipeline without the approved proposals for extension to Kanpur and Gwalior and for expansion of Mathura refinery, it said the expenditure of Rs. 6.20 crores was infructuous. "Due to delayed review of the demand-supply position, the company incurred an infructuous expenditure of Rs. 2.24 crores on the capacity augmentation of the Panipat-Ambala-Jalandhar section of the Mathura-Jalandhar pipeline,'' the report said.

In conclusion, CAG said the pipelines division undertook the execution of the projects for laying of branch pipelines and capacity augmentation of different section of existing pipelines based on anticipated throughput projects.

`'However, after completion and commissioning of the projects, the actual results achieved indicated that the branching and augmentation of the major projects were executed on the basis of defective planning and lack of proper coordination amongst various divisions of the company.

"Consequently, the expenditure incurred proveded wasteful and the installed capacity could not be used,'' it said.

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