The Hindu : CAG faults funds handling in mini-flyovers project

Online edition of India's National Newspaper
Thursday, May 23, 2002

Southern States

Southern States - Tamil Nadu-Chennai

CAG faults funds handling in mini-flyovers project

By T. Ramakrishnan

CHENNAI May 22. The ``mini-flyovers project'', which caused a political upheaval last year, has now attracted severe criticism from the Comptroller and Auditor General (CAG), for its handling of finances.

On two counts, the CAG found fault with the Chennai Corporation.

There was a lack of correct assessment of funds required for each month during the execution of the project (March 1999 to November 2000) and even after (till June 2001). As a result, unutilised loan amounts got accumulated and the civic body had to incur an ``avoidable interest liability''.

According to the CAG report placed during the recently-concluded Budget session of the Assembly, at one stage, the balance of unutilised loan amount was as high as Rs. 14.5 crores (in December 1999). The CAG worked out the ``avoidable interest'' as around Rs.1.4 crores.

Four years ago, the Corporation decided to build nine mini-flyovers in the city at an estimated cost of Rs. 94.5 crores. The Tamil Nadu Urban Finance and Infrastructure Development Corporation (TUFIDCO) agreed to extend a loan assistance of 90 per cent of the project's total cost and the remainder was to be met by the civic body. Of the TUFIDCO funds, 40 per cent (of the project cost) would carry an interest rate of 15 per cent and 50 per cent from the Mega City Programme at 5 per cent.

The Chennai Corporation and the TUFIDCO entered into an agreement for each flyover separately, which included separate time schedules for loan disbursement and repayment. Interest was payable from the date of drawal of each instalment of loan.

As on June 2001, the civic body had drawn about Rs. 63.3 crores and incurred an expenditure of 58.6 crores.

The CAG also noted that of the unutilised accumulation, Rs. 6 crores was invested by the Chennai Corporation in September 2000 in short-term fixed deposits for 91 days in Canara Bank. The purpose behind the move was to avail loans against the deposits for meeting the annuity repayment of loans obtained for other purposes from the Madras Urban Development Fund and Housing & Urban Development Corporation.

``As per the conditions of the agreement, such investment would attract recall of loan with interest at 18 per cent as such investments were considered as unauthorised utilisation/diversion of funds. The fact that such investments were made clearly showed that the unutilised loan amounts were not immediately required for the purpose for which it was drawn'', the report said.

To this, the reply of the Superintending Engineer (Bridges), given in June 2001, was that the loan amounts were drawn in anticipation of payment of contractors and the accumulation of the unutilised loan amounts was due to administrative delays. However, the CAG found it untenable.

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