CAG audit of Rapid Metro to take at least six months

The high court, in September, originally gave the CAG 30 days to carry out the exercise, beginning with defining the scope of the audit and appointing a team of auditors.

The Comptroller and Auditor General of India (CAG) has sought a period of six months from the Punjab and Haryana high court for submitting its forensic audit of the Rapid Metro’s finances, citing the extensive scope of work involved. The high court, in September, originally gave the CAG 30 days to carry out the exercise, beginning with defining the scope of the audit and appointing a team of auditors.

File photo of Rapid Metro train in Gurugram (HT File)

In an affidavit submitted to the court on November 22 (a copy of which is with HT), the CAG affirmed that the undertaking would require a minimum of two months. “The primary audit, being quite large, is likely to take couple of months provided all the requisite records are made available promptly without any delay,” the CAG said, adding, “the quantum of work of financial audit is amounting to ₹3,200 crore.”

The CAG requested that the court “grant an extension of at least six months to complete the audit.” The CAG on Friday also floated a request for proposal (RFP) to engage an accounting firm for the project and is expected to award the work by December 2.

The firm is expected to provide an ‘inception report’, with an initial risk assessment and audit methodology within the first two weeks of being awarded the work, while a draft report of the audit is required to be submitted in three months, with another two months required for its vetting and finalisation.

The high court, though, has instructed that the task be completed in three months, officials privy to the matter confirmed.

“The scope of the audit has also been decided after a meeting held with both parties on November 8,” said Chetan Mittal, advocate for the Haryana Mass Rapid Transport Corporation and Haryana Shahri Vikas Pradhikaran.

“The Haryana government is satisfied with the scope determined,” Mittal added.

In its scope of the audit (a copy of which is with HT), the CAG has clarified that it will only determine the amount of ‘debt due’ as per the original concessionaire agreement between Haryana and the Rapid Metro. According to the original contract between the two parties, the minimum amount to be paid by the Haryana government (in case of breach of contract by either party) is 80% of the total debt accrued by the project.

“The CAG will also look into the utilisation of funds by the concessionaire to examine whether they were used for the project in question, and scrutinise the annual reports to ensure that the information contained has been subject to required accounting standards,” Mittal added.

Any discrepancies will impact the amount of debt payable by the Haryana government to the two IL&FS promoted special purpose vehicles — Rapid Metro Gurugram Limited and Rapid Metro Gurugram South Limited — which previously ran the metro line, until operations and maintenance were handed to the Delhi Metro Rail Corporation in October.

The CAG has clarified, however, that its job will be limited to determining the HMRTC and HSVP’s debt, and will not extend to highlighting possible criminal acts by either party and other encumbrances on the project. “Encumbrances and liabilities on the said metro projects, shareholdings/share in valuation of assets of the concessionaire companies, change of shareholding rights, criminal acts and liabilities etc....will not be examined in the present audit,” the CAG told the court on Friday.

“These issues as well as other issues which may have impact on the viability of the project or relate to criminal acts etc. as stated by HMRTC can be got audited/examined by HMRTC through other agencies or through a separate forensic audit,” the affidavit goes on to state.

An IL&FS spokesperson declined to comment. Officials of HMRTC and HSVP did not respond to requests for comment.