M A I N   N E W S

Oil, Civil Aviation, Navy & IAF singed by CAG reports
Tribune News Service

New Delhi, September 8
Although not as damning as some of the earlier reports, three CAG reports tabled in Parliament on the last day of the Monsoon session today, made the Government squirm again.

Describing the decision to place orders for 111 aircrafts for Air India and Indian Airlines as a ‘recipe for disaster’, the Comptroller & Auditor General’s long-awaited report, roundly criticised the Ministry of Civil Aviation for the ‘supply driven’ order. The decision, the report pointed out, was taken not by the airlines but at the ministry.

The original proposal was to buy 28 aircrafts and was first floated in 1996. But while the United Front and NDA governments failed to finalise the contract till 2004, the UPA government moved at lightening speed so that in a little over a year, the proposal to buy 68 aircrafts for Air India and 43 for Indian Airlines was formulated and approved by the Air India board, the ministry, the Planning Commission, the Public Investment Board and the Cabinet Committee on Economic Affairs.

The report also criticised the merger of the two national carriers and held the Government responsible for not allowing them a level playing field. Their most profitable routes were hived off to other airlines, records the report, and added that both the decisions, the purchase order and the merger, originated ‘from the top’ and not from the airlines.

Another CAG report pulled up the Petroleum Ministry for giving undue favour to Reliance Industries. It faulted the Oil Ministry and the Directorate General of Hydrocarbons ( DGH) for allowing Reliance to retain ‘the entire 7645 Km offshore block’ in the Bay of Bengal in contravention of the Production Sharing Contract. Reliance should have relinquished 25 per cent of the area as per the PSC, it stated.

The report, however, is silent on whether the Reliance claim of capital expenditure having gone up from the estimated US $ 2.4 billion in 2004 to US $ 8.8 billion in 2006 was unjustified or inflated.

In a third report, the CAG pulled up the Indian Air Force and the Navy for procedural irregularities, acquiring aircrafts without weapons, purchasing ineffective missiles and poor supervision in installing vital radars and aerostats causing loss to the treasury.