E-Paper
CAG report: Audit slams HSIIDC for imprudent loan for MRTS
The Comptroller and Auditor General (CAG) has slammed the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) for imprudent resource mobilisation for financing the Mass Rapid Transport System (MRTS)
The Comptroller and Auditor General (CAG) has slammed the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) for imprudent resource mobilisation for financing the Mass Rapid Transport System (MRTS).
In its report on public sector undertakings (social, general and economic sectors) for year-ending March 2019, the CAG said that HSIIDC availed Housing and Urban Development Corporation Limited (HUDCO) loan carrying higher rate of interest despite availability of cheaper cash credit or term loans for financing of MRTS, which resulted in an avoidable expenditure of ₹11.24 crore.
“It is recommended that being a commercial organisation, the HSIIDC should act with prudence to safeguard its financial interests,” the CAG said.
The report stated that HSIIDC, in June 2006, entered into a joint venture agreement with the Delhi Mumbai Industrial Corridor Project Implementation Trust Fund for development of MRTS between Gurugram to Manesar and Bawal.
The detailed project report put the approximate cost of the project at ₹17,328 crore to be funded through loans raised from multilateral agencies, the Japan International Cooperation Agency, World Bank – IBRD and domestic market.
The state government was to contribute ₹1,313 crore in cash and land valuing ₹1,368 crore as equity towards the project.
“The company, in April 2016, approached HUDCO for term loan of ₹1,313 crore for land acquisition and allied uses. However, before sanctioning the loan, the company had acquired 452-acre land for MRTS in Gurugram, Manesar and Rewari (for Bawal) at a cost of ₹1,220 crore and transferred this amount from other available sources to land acquisition collectors for making payments to landowners,” the audit said.
“In the meantime, HUDCO sanctioned a loan of ₹876 crore bearing interest at the rate of 10.15% per annum subject to HSIIDC providing government guarantee and budgetary provision in the state government budget for repayment of dues and released first instalment of loan of ₹250 crore upon receipt of the state government guarantee,” the audit added.
“Thereafter, HUDCO repeatedly insisted the HSIIDC to provide budgetary provision in the state budget and stated that non-compliance thereof shall be treated as an event of default. The HSIIDC, however, decided to repay the HUDCO loan as budgetary provision could not be arranged and even the interest charged by HUDCO was considered higher as compared to other loans. It repaid the loan in February 2018 along with pre-payment charges of ₹5.04 crore,” the audit said.
The CAG observed that before drawl of HUDCO loan, the HSIIDC had already made payment of ₹657 crore to the LACs concerned and an amount of ₹562 crore was payable in March 2017.
The HSIIDC had sufficient amount of unavailed loan or cash credit limit in the range of ₹916 crore and ₹3,337 crore between February 2017 and February 2018 (excluding HUDCO loan) at cheaper rates of interest ranging between 8.1% and 9.65% per annum for making balance payment of ₹562 crore.
The government, while granting guarantee to the loan in December 2016, had desired that as the rate of interest of HUDCO loan was higher, the HSIIDC should raise minimum amount of loan as per actual requirement. Thus, the company could have avoided drawl of HUDCO loan, the report stated.
