CAG stresses on construction audit of port projects

Move will help determine the investments made by the port developers and also valuation of assets

The office of the Comptroller & Auditor General of India (CAG) has urged the Odisha government to conduct audit of non-major port projects during the construction stage.

The Central auditor feels audit during the time of construction will help determine the investments made by the port developers and also valuation of assets.

“After receiving the direction from the CAG, we have written to the port developers seeking their views on the proposed audit. Presently, the audit only applies to operational and financial aspects of the port,” said an official source.

The audit to be carried out by a third party is part of the proposed amendments to model concession pacts planned by the state commerce & transport department.

The revised terms would make it mandatory for the original promoters to retain at least 51 per cent stake for three years from the date of commencement of commercial operations. This is contrary to the existing condition which allows dilution of equity to below 51 per cent after a non-major port starts commercial operations.

The state government had identified 14 locations for development of non-major port projects. Of these locations, a deep sea port planned at Barunei Muhan in Kendrapara district has been shelved owing to threat to mass nesting site of Olive Ridley turtles.

Only two non-major ports at Dhamra and Gopalpur have commenced operations. Dhamra port, a 50:50 joint venture (JV) between L&T and the Tatas has already seen grounding of investment of Rs 3,600 crore in the first phase of its commercial operations that began in May 2011. The port is awaiting environment clearance and land allotment to start its second phase operations.

The port promoters had lined up Rs 10,000 crore for its second expansion plan that would upgrade capacity to 100 million tonne, from 25 million tonne currently.

Other locations identified for development of port projects include Jatadhari Muhan, Bichitrapur, Palur and Kirtania to name a few.