The CAG has come down heavily on the Gujarat government and state Public Sector Undertakings for causing a loss of nearly Rs 580 crore to the exchequer by bestowing 'undue' favours to large corporate entities.

Gandhinagar: The Comptroller and Auditor General of India (CAG) has come down heavily on the Gujarat government and state Public Sector Undertakings for causing a loss of nearly Rs 580 crore to the exchequer by bestowing "undue" favours to large corporate entities.

The major industrial houses to whom the Narendra Modi government played the benefactor included Reliance Industries Ltd (RIL), Essar Steel and Adani Power Ltd (APL), the report for year ended March 31, 2012, said. The government auditor's report, tabled in the state assembly yesterday, also said the state government tweaked rules to grant land to automaker Ford India and engineering and construction major Larsen and Toubro resulting in loss of revenue.

"Gujarat State Petronet Ltd (GSPL) was responsible for deviating from the agreed terms of recovery of gas transportation charges from the specified entry point of the company's pipeline network and this led to passing of undue benefit of Rs 52.27 crore to RIL," the report said.

CAG was of the view that GSPL had failed to safeguard its own interest and passed on undue benefit to RIL. Similarly, it noted that Gujarat Urja Vikas Nigam did not adhere to terms of the Power Purchase Agreement (PPA), which led to short recovery of penalty of Rs 160.26 crore and passing of undue benefit to Adani Power Ltd (APL). The main Opposition Congress promptly utilised the CAG report to attack the Modi government, alleging a "collusion" between the state dispensation and corporate houses.

"We have been raising the issue of collusion between corporate houses and the state government at every forum. The corporate houses get undue favours from the state government and in turn they praise the Modi government," Congress spokesman Manish Doshi said. The state government, however, sought to downplay the issue, saying what the government auditor had noted was "not a scam but just irregularities". "This is not a scam but in the language of CAG it is called irregularities. The report will go to the Public Accounts Committee and later the state government will take a call on it," Gujarat finance minister Nitin Patel said.

The CAG also indicted the Gujarat government for regularising 7,24,897 square metres of land "encroached" by Essar Steel Company Ltd (ESCL) at Hazira in Surat at "unjustifiable" price, resulting in short recovery of ad hoc occupancy price to the extent of Rs 238.50 crore.

"Government land measuring 7,24,897 square metres was encroached by ESCL in Hazira, Surat district. On request of the company, the government decided in July 2009, to regularise the encroachment by levy of 2.5 times of ad hoc value of land at Rs 700 per square metre, on the ground that the land in a nearby area was given to L&T," the report said.

"We noticed that Rs 700 per square metre considered by the government for working out the ad hoc value was not justifiable," the CAG report said. The report said the state government granted land to Ford India and Larsen and Toubro at concessional rates "playing around the rules".

L&T was alloted government land for manufacture of super critical steam generators and forging shop for nuclear power plant. The price of land was fixed by the District Level Valuation Committee instead of State Level Valuation Committee rate which resulted in forgoing of revenue of Rs 128.71 crore, it said.

The government auditor said the state government had allotted around 460 acres (18,63,687 square feet) valued at Rs 205 crore to Ford India Private Limited without price fixation by the State Level Valuation Committee. The report, however, did not mention the quantum of loss to state exchequer on this account.

"It is desirable if the government followed a uniform policy for allotment of government land to safeguard its revenue and public interest at large," the report said.

PTI