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May 13, 1999


PAC recommends inquiry into telecom bungling

Email this story to a friend. The Public Accounts Committee has recommended ''strongest punitive action'' against Department of Telecommunication officials for showing undue favours to private firms resulting in the government losing Rs 109.8 million in the purchase of solar photo voltaic panels during 1991 to 1995.

The committee, in its ninth report presented to the Lok Sabha recently, noted with ''profound concern'' that DoT had extended undue benefit of Rs 240.3 million to the suppliers in the purchase of 88,000 SPV panels at a cost of Rs 2.141 billion which were used in the rural telecom network during the period.

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The department, the committee said, had placed commercial orders with ineligible firms after entertaining post bid interventions from them.

DoT neither enforced the provisions of the purchase order to safeguard the interest of the government which led to extending favours to the firms nor did it shortclose the tender after expiry of the delivery schedule even when it was aware of steep reduction in prices of the panels.

''Besides, DoT adopted discriminatory treatment towards some firms, both in placement of supply orders and prescribing the delivery period and favoured the private firms at the cost of proven public sector undertakings. Repeat orders were placed at a time when prices were falling and that too without protecting government interest,'' the committee observed.

The PAC drew unmistakable inference that undue favour was shown to the Hyderabad-based ARM and the Secunderabad-based RES which bagged supply orders for 14,000 units out of the total 26,800 units for which DoT placed supply orders in May, June 1994.

Other public sector units such as BHEL and CEL got orders for only 3,200 units each.

DoT's failure to invoke the standard clause of the contract resulted in an excess expenditure of Rs 109.8 million on the repeat orders for 19,600 SPV panels with six firms. ARM and RES were the major beneficiaries among others, the committee said.

The committee recommended evolution of a suitable mechanism by DoT to ascertain whether the supplier firms were purchasers or manufacturers as it would be difficult in the absence of any monitoring/inspecting mechanism to confirm whether the firms had established the facility or were supplying them after procuring the panels from others or importing them.

''From a close and critical scrutiny of written replies furnished by DoT to the committee and the examination of the witnesses, the two firms - ARM and RES - were shown undue favours apparently for extraneous considerations without any resistance or even whimper of protest from DoT,'' the committee observed.

The committee said it was ''appalled to note this attitude of complete surrender / complicity / connivance of some higher officials which helped foist such a blatant irregularity and cannot but deplore that those who had a duty to point out the implications of the order of the minister became mute bystanders and instruments in the execution of irregular orders''.

"It would be proper and essential to include this aspect as well within the ambit of independent ongoing investigation in view of the ''arbitrary and ad hoc manner'' in which the delivery schedule was fixed for supply of SPV panels by different firms without giving due regard to the quantity to be supplied, the committee said.

ARM quoted the lowest rate of Rs 16,885 per system in response to DoT's tender in September 1994. Despite its failure to effect supplies within the delivery schedule and the option available with it to foreclose the supply order as per the terms of the contract, the department chose to procure the remaining units against the earlier supply order of May 1994 at higher price of Rs 22,489.80.

This resulted in an undue favour of Rs 243.8 million to ARM on the supply of 7,200 units. The committee said it was shocked to find that the firm was allowed to continue supply at the higher rate even after the date of expiry of the extended period and much beyond the date of the tender for 1994-1995 which needed a thorough probe and punitive action against the erring officials concerned.

''It is common practice in DoT that in cases where the finalisation of the rate for the next year's purchase was delayed, the supply orders were placed at a provisional price which were subject to revision in accordance with the price fixed in the tender for the current year's purchases,'' the committee noted.

''Responsibility must be fixed for such a grave lapse and stringent action taken against persons who showed undue favours to private firms and brought unavoidable pecuniary loss to the government,'' the 22-member committee of MPs, headed by Manoranjan Bhakta, recommended.


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