Odisha contests CAG view on promoter selection

Audit scrutiny by CAG revealed that MoUs were signed based on suo-moto offers made by the promoters

The Odisha government has contested the views of the Comptroller & Auditor General of India (CAG) on selecting developers of industrial projects through the competitive bidding route.

The state government argued that its Industrial Policy Resolution (IPR), 2007 mentions selection of private developers through the competitive bidding process for social infrastructure projects and not industrial projects.

“The audit note has failed to appreciate the context and purpose in which competitive bidding is usually adhered to for establishment of projects. The MoU (memorandum of understanding) projects in Odisha are neither joint sector projects nor based on delivery of a priced public good which would have necessitated bidding. When all parameters are already laid down in IPR and government notification, no bidding parameter or necessity remains as there is no concession in such investment projects and there is no risk sharing or risk mitigation”, Nirupama Mallick, joint secretary, industries department, wrote to Accountant General-Odisha.

“The facilitation support and commitment made in MoUs is universally available to all projects approved in the state, even to those projects wherein MoU is not signed. Consequently, there is no discrimination in favour of one party. Entering into MoUs for industrial projects based on suo moto offers is not in violation of the doctrine of equality”, the letter added.

The CAG which is conducting performance audit of commitments made to MoU signed companies on land, water and minerals, noted that pre-requisites for signing of MoUs with promoter companies was not prescribed.

The Central auditors had pointed out that MoUs were signed based on suo-moto offers made by the promoters rather than on 'expression of interest' basis or tender process.

 As a result, interest of the state could not be protected and the state was deprived of best investment proposals of different promoters.

The CAG said, neither any competitive bidding was made for selection of parties for setting up of any particular type of industries/infrastructure projects nor even any Request for Proposal (RFP) was issued. On the contrary, states like West Bengal, Gujarat and Karnataka are inviting RFP for setting up of industries in the state.

The state government, however, defended its stand, arguing that its IPR is akin to an RFP proposal wherein all the facilities being provided by the state under different heads and sectors is laid down along with the modalities and procedure to be followed by a perspective investor.