CAG audit finds ₹16-crore gap in Lucknow waste user charge recovery

The audit revealed that out of the ₹49.15 crore in recoverable user charges from 2017 to 2021 -- calculated based on minimum rates of ₹40 per household and ₹100 per non-residential establishment per month -- only ₹32.88 crore was actually collected.

An audit by the Comptroller and Auditor General (CAG) has flagged serious financial irregularities in the collection of user charges under the solid waste management system of the Lucknow Municipal Corporation (LMC), exposing a loss of over ₹16 crore between 2017 and 2021.

The audit has flagged serious financial irregularities in the collection of user charges under the solid waste management system of the Lucknow Municipal Corporation. (File Photo)

According to the CAG report, LMC had signed a concessionaire agreement in March 2017 with Eco Green Private Limited for door-to-door collection, transportation and processing of solid waste. As per the contract, the concessionaire was also responsible for collecting user charges from residents and establishments on behalf of the municipal body, with minimum recovery targets of 50%, 60% and 75% set for the first three years, respectively.

However, the audit revealed that out of the ₹49.15 crore in recoverable user charges from 2017 to 2021 -- calculated based on minimum rates of ₹40 per household and ₹100 per non-residential establishment per month -- only ₹32.88 crore was actually collected.

Despite the shortfall, LMC continued to pay the full tipping fee to the concessionaire every month without deducting the uncollected user charges, violating the terms of the agreement, which empowered the municipal body to withhold payments in case of collection failure.

In its reply to the audit (June 2023), the state government acknowledged that the concessionaire failed to carry out required information, education and communication and public awareness (IEC&PA) activities, which could have improved user charge recovery.

The government claimed that several notices were issued, and some penalties were imposed. It also stated that appropriate legal action would be taken against the defaulting concessionaire.

“The audit highlighted a pattern of contractual non-compliance and poor financial oversight, raising questions about accountability in public-private partnerships in the sanitation sector, “ Mukesh Singh Chauhan, a corporator, said.

Additional municipal commissioner Arvind Rao said, “LMC terminated the contract of Eco Green for the same reason and the company was blacklisted.”