Public sector fertiliser producer Rashtriya Chemicals and Fertilisers (RCF) incurred an ‘infructuous’ expenditure of ₹9.02 crore and loss of interest of ₹2.67 crore on leasing of land at Vizag Port Trust (VPT), says a report of the Comptroller and Auditor General (CAG).
Poor planning Inadequate planning for development of warehousing facilities and utilisation of leased land at Vizag Port Trust (VPT) led to the fruitless expenditure and interest loss, the report said.
The RCF board decided in July 2007 to acquire 10 acres from VPT for 30 years to construct about 80,000 tonnes storage area.
The company took possession of the land in January 2008 and entered into a lease deed with VPT in June 2009.
Refund looking bleak RCF had incurred a total expenditure of ₹9.02 crore between April 2009 and March 2014, the report said, pointing out that the lease was terminated as the company did not develop the facilities within the stipulated time.
“RCF’s efforts to get refund of the upfront lease premium paid to VPT looks bleak as the port has refused the refund of ₹7.65 crore since the lease was terminated due to failure to adhere to lease conditions,” it added.
Reply not satisfactory The reply given by the RCF management and Fertiliser Ministry, explaining that investment in infrastructure of VPT was a backward integration plan for handling the anticipated rise in import of urea, rock phosphate, potash and other chemicals, failed to satisfy the auditor.
“The decision to take the land on lease was based on incorrect, inflated and inadequate information,” the auditor concluded.