CAG assails Def Min, Navy for delay in refit of submarine

Government auditor CAG today slammed the Navy, Defence Ministry and a state-run shipyard for the protracted delay in carrying out refit of submarine INS Sindhukirti because of which the force was unable to operate one of their lethal platforms since June 2004.

The Comptroller and Auditor General of India in its report submitted to Parliament said the medium refit of the EKM class submarine was due for commencement in 2001 but was carried out from January 2006 by when the material state of the vessel had witnessed "extensive deterioration".

It noted that though the refit was scheduled to to be completed by January 2009, due to the deficiency in manpower deployed by the Hindustan Shipyard Limited, lack of protection to main line cables, delayed supply of yard materials and modernisation of equipment, the submarine was delivered by the shipyard to the Navy in June this year with Sea Acceptance Trial to follow.

"As a result, the Navy is unable to operate one of their lethal platforms since June 2004," the report said.

It also noted that the cost of the refit was revised from Rs 629.50 crore (June 2005) to Rs 999.52 crore (August 2013) with additional liabilities of Rs 92.17 crore still being claimed by the yard in September 2015.

"This apart, improper financial management led to the diversion of funds to the tune of Rs 92 crore," the report said.

In its recommendations, CAG said the planning and commencement of refit of submarines should be as per schedule to avoid excessive exploitation of vessels extension of refitting time.

"The Ministry should ensure that efforts are augmented to improve the scale of utilisation of indigenous materials in line with its own directives.

"The Navy should establish a dedicated Project Team, the expertise of which is available to each indigenous offloaded refit," the report said.

CAG also criticised the Coast Guard and the Defence Ministry for the delay in acquisition of inshore patrol vessels.

It said that eight of the 13 IPVs decommissioned between December 2008 and July 2013 could be replaced after a delay of four to sixty months, while replacement of the remaining five vessels had not been received, thereby resulting in restricted operational effectiveness of the Coast Guard. 

About Visakhapatnam Port, CAG said it did not collect penal interest of Rs 12.99 crore as against provision available in the lease agreement.

It recommended that the Ministry should review the existing guidelines and policies to formulate a comprehensive policy to deal with all issues relating to land management.

It said guideline issued in 2014 policy to deal with constructed permanent structures inside custom bond area in relation to allotments made in previous periods may be revisited so that inherent constraints in the proposed mechanism are removed.

"All critical terms and phrases in relation to land allotment and allied activities may be clearly defined to avoid inconsistent treatment by individual ports," it said.

It also recommended for evolving an arrangement for minimising the time required to resolve issues where Ministry's approval was required by delegating certain powers to the ports.

"A review mechanism may be put in place in the Ministry stipulating at least half yearly review of land management decisions and activities of individual ports, which would help ensure compliance with the policies in vogue," it said.

Similarly, a structured quarterly review may be introduced in the ports in order to report status of land management process and procedures to the respective Boards vis-à-vis compliance of land policy guidelines, it said adding the the Ministry was generally in agreement with the recommendations.

Significant findings also include that the guidelines of 1995 and 2004 were silent about construction of permanent structures on port land but that of 2010 stated that a port trust Chairman could allot land inside custom bond area on medium term lease of up to a period of 10 years, but without construction of any permanent structures.

"Even though the policy guidelines of 2014 gave some clarification, there are still some ambiguities in the guidelines," it said.

The policy guidelines issued in 2004 and 2010 stipulated that Scale of Rates (SoR) should be fixed in accordance with the 'end use' of the land and different rates should be fixed considering the purpose for which land was allotted.

Land policy of 2014 did not link end use of land to market value of land. Audit examination revealed that there was no uniformity among the ports in identifying land according to their use and suggest tariff accordingly so as to optimise their revenue streams.

In another report about financial management and internal control at Port Management Board (PMB), the CAG said administration of Andaman & Nicobar Islands did not take any initiatives for framing periodical rules and regulations necessary for the smooth running of PMB.

"Thus, there were shortcomings in levy and collection of charges for vessel/cargo related services; the workforce for cargo handling was not managed efficiently; there was no policy for augmentation of revenue nor was there any policy for land management," the report said.