State-owned Rashtriya Chemicals and Fertilisers (RCF) incurred an infructuous expenditure of Rs 9.02 crore and loss of interest of Rs 2.67 crore on leasing of land at Vizag Port Trust, says government auditor CAG.
RCF board had decided in July 2007 to acquire 10 acres of land from Visakhapatnam Port Trust (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.
RCF had incurred a total expenditure of Rs 9.02 crore between April 2009 and March 2014, the report said, adding that the lease was terminated as the company did not develop the facilities within the stipulated time.
“…indaequate planning for development of warehousing facilities and utilisation of leased land at Vizag Port Trust. resulted in infructuous expenditure of Rs 9.02 crore besides loss of interest of Rs 2.67 crore,” CAG said.
“RCF’s efforts to get back refund of the upfront lease premium paid to VPT looks bleak as the Port has refused the refund of Rs 7.65 crore since the lease was terminated due to failure to adhere to lease conditions,” it added.
The auditor was also not satisfied with the reply of the RCF management and Fertiliser Ministry, which contended 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.
“The decision to take the land on lease was based on incorrect, inflated and inadequate information,” the auditor said.