Railways made Rs 6.85 cr irregular payment to foreign vendor: House panel

The Banaras Locomotive Works (BLW) of Indian Railways purchased equipment from a foreign vendor worth Rs 6.85 crore in 2017 for diesel locomotives whose production was already stopped, according to a Public Accounts Committee (PAC) report.

The committee, which tabled its report in Lok Sabha on Wednesday, expressed surprise that the vendor had delivered the equipment beyond the delivery schedule in violation of the purchase agreement and BLW would have rejected the supply.

However, it agreed to buy at approximately 36 per cent discounted price, the report said.

The issue relates to the purchase of 660 channel air boxes in November 2018 for manufacturing diesel locomotives.

According to the report, in view of increasing electrification of routes, the Railway Board decided in May 2016 to manufacture electric locomotives at BLW and this was started from February 2017.

From 2019-20, the production of diesel locomotives at BLW was completely stopped. The committee said that in May 2016, BLW placed a purchase order to a foreign supplier for the 660 channel air boxes at a cost of USD 2,375 per unit.

Instead of delivering the consignment by February 2017, the supplier made it by August 2017 against the tender norms, the committee found.

BLW initially rejected the consignment but when the vendor offered a discount of approximately 36 per cent, it reversed its decision in July 2018 and paid Rs 6.85 crore in November 2018 by extending the delivery period up to August 2017, the committee said.

The Railways defended its decision saying the purchase was based on the assessment (joint procedure order) regarding the requirement of spare parts to maintain diesel locomotives.

The committee expressed its dissatisfaction saying the assessment for requirement of spares parts was made on June 1, 2018 whereas the purchase order was issued in May 2016.

The committee said it also noticed that in July 2018, when BLW decided to accept the 660 channel boxes from the supplier at a lower rate, it had in stock 295 such boxes already.