Dhamra port charged higher tariff, hiked project cost: CAG

Exit of original promoters of port projects violated concession pact

Dhamra port, a non-major commercial port promoted jointly by Tata Steel and L&T, charged higher tariff with the port's user charges being 153-799 per cent higher than the rates prescribed by the Tariff Authority for Major Ports (TAMP).

In case of cargo related charges also, the Dhmara port collected Rs 230-320 per tonne whereas the tariff for cargo handled at Paradip port was Rs 135.79 per tonne between 2008-09 and 2010-11. Due to this huge difference in tariff, the Dhamra port collected Rs 84.67 crore extra in handling 6.08 million tonne of cargo during May 2011 to May 2012, says the latest report of the Comptroller & Auditor General of India (CAG).

The CAG also observed that the project cost of Dhamra port was escalated from the originally estimated Rs 2464 crore to Rs 3317.84 crore.

"The possibility of higher tariffs due to the escalated cost cannot be ruled out. Thus, one of the intended purposes of the PPP (public private partnership) infrastructure port projects in the state, which was to provide better quality services and facilities at a reasonable and affordable price is diluted”, the report said.

According to CAG, the state port policy of 2004 required that the Odisha Maritime Board (OMB) would be vested with powers to impose, review and modify the existing port charges in minor ports subject to approval of the government.

Unless the tariff is regulated, there is a possibility of the concessionaire getting more returns on its investment than what is projected in the detailed project reports (DPRs).

However, OMB was not constituted to plan and act for maritime development in the state as well as to oversee the implementation of the port projects in PPP mode.

Besides, there were delays in obtaining environment clearance leading to extension of deadline for commissioning of projects. In case of Dhamra port, the commencement date was fixed after 13 months of due date on the ground of delay in handing over of acquired land though such delay was attributable solely to the developer as land acquisition process in 66 villages lapsed due to non-payment of the cost of compensation in time as well as delay in taking over possession of acquired land by the developer despite repeated requests.

This led to an extra expenditure of Rs 30.86 crore and due to delay in execution of Dhamra port, the government was deprived of revenue share of Rs 99.26 crore.

The CAG also pointed out that contrary to the provisions of concession agreement, major partners exited during the lock-in period selling their shares to other partners and other companies. Neither independent engineers were engaged to oversee drawing and design as well as quality parameters nor were financial and operational auditors engaged by the government to assess the government's revenue share calculated by the port authorities.

Escrow account was not maintained by the developer of the Dhamra port while such provision was not even included in the concession agreements of other ports.