A CAG report tabled in Lok Sabha on Thursday has flagged non-compliance by Purti Sakhar Karkhana Limited (PSKL) — a bagasse based co-generation project of the Purti Group in which Union Minister of Road Transport and Highways Nitin Gadkari was once a board member — of conditions for interest subsidy extended to it by the Ministry of New and Renewable Energy (MNRE).

According to the CAG report on “Financing of Renewable Energy Projects by Indian Renewable Energy Development Agency Limited (IREDA)”, in the case of PSKL, the ministry sanctioned Rs 1.92 crore as interest subsidy. Against this, the ministry released Rs 1.37 crore in June 2004 to IREDA on net present value-basis for disbursement to the borrower, PSKL.

The audit found that the borrower did not comply with the conditions for interest subsidy that stipulated the renewable energy project was to operate for a minimum of 10 years after its completion. The project, which was to be commissioned in February 2004, but finally commissioned in March 2007, in June 2009 over to 100 per cent coal-based operation as against up to 25 per cent allowed in the subsidy scheme.

Moreover, though the loan became a non-performing asset in March 2007, the actual benefit from the subsidy amounting to Rs 1.66 crore — including an interest subsidy of Rs 1.17 crore and accrued interest of Rs 49 lakh thereon — was passed on till December 2009. Unutilised interest subsidy of Rs 22 lakh was refunded to the ministry in August 2010.

The CAG found: “The borrower settled its outstanding dues by way of OTS (one-time settlement) in December 2009 for an amount of Rs 71.35 crore against Rs 84.12 crore, but IREDA did not initiate any action for recovery of the interest subsidy of Rs 1.66 crore. Thus, though the borrower violated the terms and conditions for subsidy schemes, IREDA continued giving subsidy.”

According to the CAG report, the IREDA management stated in April 2014 that PSKL settled the account with it and paid the entire loan outstanding as per OTS sanction, and that the implementation of the project was delayed due to various reasons.

On the use of coal for operation of the plant, the management stated that the same needs to be seen on the entire fuel mix used during entire period and not at a particular point of time.

The IREDA management stated that the subsidy of Rs 1.17 crore was passed on to PSKL till the time it settled the dues, and for the remaining period of the loan, the subsidy that was not passed on to PSKL was refunded to the ministry.

As per the national auditor, IREDA further stated that any account becoming an NPA does not necessarily require that the interest subsidy will not be passed. In this case, PSKL paid its dues as per OTS norms. The subsidy was passed up to the quarter ending September 2009.

IREDA also stated that the project had been commissioned and not abandoned requiring the interest subsidy to be recalled.

“The reply of the management may be seen in the context that avoiding default on repayment by the borrower and limited deviation from renewable energy sources (up to 25 per cent) were important components of the scheme, and as such, IREDA cannot change/interpret specific conditions for grant of subsidy of GOI schemes. Further, the OTS proposal was sanctioned on the ground that the project was no longer an RE (renewable energy) project,” the CAG stated.

Purti Group could not be reached for comment.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest India News, download Indian Express App.