New Delhi: Government auditor CAG on Friday flayed Department of Fertiliser (DoF) for delaying contract finalisation and said this resulted in an "unavoidable" subsidy burden of Rs 5,555 crore.
"Fixation of benchmark at a lower level in comparison to the then prevailing prices for determining Nutrient Based Subsidy (NBS) rates for DAP resulted in delay in finalisation of contracts for import of DAP for 2011-12, which led to an unavoidable subsidy burden of Rs 5,555 crore on government," the Comptroller and Auditor General (CAG) said.
The auditor also pointed that Department of Fertilisers imported additional quantity of fertilisers which was not required, resulting in undue subsidy payment of Rs 653 crore.
"DoF had to bear additional subsidy burden of Rs 653 crore due to payment of subsidy at higher NBS rates in 2011-12, on additional quantity of imported fertilisers supplied to states during February-March 2012, despite there being no immediate requirement," the CAG said.
It also said that there was no monitoring mechanism in DoF to ensure that the prices fixed by fertiliser companies were based on their cost of production and were reasonable.
"DoF did not have any mechanism to assure itself about reasonability of the components included in the cost. Audit found instances which depicted loading of MRP by the companies with some components that were not reasonable," CAG said in the statement.
The report also raised concerns that DoF did not finalise guidelines for recovery from fertiliser companies using cheap domestic APM gas for production even after the delay of more than two years after direction of EGoM in February 2012 in this regard.
Meanwhile, CAG has recommended that DoF may factor in the impact in movement of international prices while fixing the benchmark price before start of financial year.
It also suggested that as NBS policy gives freedom to companies to fix MRP, DoF may critically review that prices are actually fixed by companies at the reasonable level.
