CAG pulls up Nalco for less than optimal performance, loss of earning

Production loss, extra expenditure estimated at over Rs 2000 crore during 2012-13 to 2016-17

Comptroller and Auditor General of India (CAG) has rapped blue chip metal firm National Aluminium Company Limited (NALCO), a public sector enterprise under Ministry of Mines, for less than optimal performance resulting in excess expenditure and loss of earning to the tune of more than Rs 2,000 crore.

The central auditors, in their scrutiny, covered production performance of Nalco’s mines, alumina refinery, smelter plant and captive power plant for the period 2012-13 to 2016-17.

In its report tabled in the Parliament on Wednesday, CAG said, there was a production shortfall of 0.96 million tonnes of alumina hydrate at Nalco's refinery primarily due to under-performance in mining and allied activities.

With lower production at mines pulling down bauxite stock at the refinery end, the company was forced to blend the stock with bauxite having higher silica content which caused excess consumption of 0.14 million tonnes of caustic soda in the refinery valued at Rs 426.27 crore during the period 2012-13 to 2015-16.

The report pointed out a 57-month delay in awarding the work order for a processability study for technological upgradation at the refinery.

The CAG report noted that non-development of a coal block allotted to Nalco by the government proved to be expensive in terms of production loss at the aluminium smelter. The capacity utilisation of smelter plant remained lower than the rated capacity due to non-availability of adequate power from the captive power plant (CPP) which faced coal supply issues.

The aluminium output at the smelter fell short by 0.49 million tonne during 2012-13 to 2016-17 for want of required power. As a result, Nalco lost the opportunity of earning incremental contribution amounting to Rs 1,086.63 crore, the report said.

The company also incurred an additional expense of Rs 326.62 crore towards excess consumption of coal in the CPP during the period under scrutiny due to higher Station Heat Rate as compared to the norms. Similarly, a failure to detect slippage in quality of coal supplied to CPP led to an avoidable expenditure of Rs 239.23 crore, it said.

The report raised concerns over violation of environmental norms by the company and said, the transportation of bauxite from Nalco’s South Block Mines at Panchpatmali by dumpers to the crushers in Central and North Block Mines, instead of despatching it through the conveyor belt, was not in line with the conditions of environmental clearance granted for operation of the mine.

“The daily discharge of red mud and red mud pond effluent from the refinery was consistently higher than the corresponding limits specified by the Odisha State Pollution Control Board during the period from 2012-13 to 2016-17,” the report added.