In order to increase the nuclear power capacity to 10000 megawatt (MW) approximately by 2000 AD, DAE drew up a nuclear power profile for establishment of additional nuclear power capacity of 7820 MW in 1984 revised to 7880 MW in 1989. This was in addition to 1840 MW envisaged to be generated from other existing/on-going plants outside the 'Profile'. Nuclear Power Board (NPB), a unit of DAE, was responsible for execution of the programme. It was incorporated as a Public Sector Undertaking in September 1987 by the name ‘Nuclear Power Corporation of India Limited’ (NPCIL).

Secretary DAE is the Chairman for Atomic Energy Commission. The execution of Nuclear Power Plants is entrusted to NPCIL, which is headed by a Chairman-cum-Managing Director. The organisational chart of DAE relating to the ‘Profile’ was as under :

2.1.3 Scope of audit

The records of DAE and NPCIL pertaining to period 1989-98, relating to the 'Profile', were examined at DAE secretariat at Mumbai, NPCIL corporate office and its branch office at Mumbai. To provide an overall picture of the 'Profile' related information prior to 1989 was also collected, wherever necessary.

2.1.4 Planning

The 'Nuclear Power Profile' of 1984 envisaged installation of twelve 235 MW and ten 500 MW Pressurised Heavy Water Reactor units (plants) to be implemented during 1985-2000. DAE appointed a Committee in July 1988 for updating the 'Profile' and making recommendations on schedule of setting up of plant and inputs required for scheduled construction of plants. The Committee was also to focus attention on capital investment required for reactors, fuel cycle facilities and other infrastructure etc.

Consequent upon review of the progress of the implementation of the 'Profile', the Committee came to the conclusion in November 1989 that the overall target of establishing an installed capacity of 10000 MW by 2000 AD continued to be feasible. In view of the advantages of going in for larger sizes of units, the Committee also decided to replace four 235 MW plants in respect of which no action had been taken, by two 500 MW plants. As action for advance procurement of material etc. had already been initiated in case of other eight 235 MW plants, no recommendation for change in those cases was made.

The Committee made the following projections for the capacity addition and flow of funds in a phased manner:

* Includes expenditure on on-going plants also

Although the Committee realised the importance of timely procurement of material and creation of infrastructure viz. acquisition of land and execution of civil works, it did not set year-wise mile stones for this.

2.1.5 Finance

The financial sanctions were issued in respect of four 235 MW plants in 1986 (two plants) and 1987 (two plants) and an expenditure of Rs 213.07 crore had been incurred on these four plants up to 1988-89. The total additional capital outlay required for the programme at 1989 price level required during 1989-2001 for the 20 plants covered under the 'Profile' and on-going plants outside the 'Profile' was estimated by the Committee at Rs 15755 crore. The projections made by the Committee were based on the presumption that financial sanctions for 10 out of the remaining 16 plants would be available during 1989-90. However, financial sanctions in respect of only two 500 MW plants for Tarapur Atomic Power Plant - 3 and 4 estimated at Rs 2427.51 crore were issued in January 1991, which was further revised to Rs 6421.00 crore (at 1996 constant rupee value) in December 1997. Thus, excluding the interest during construction of Rs 1580 crore, the cost estimates have already gone up by 99 per cent. The financial sanctions in respect of the remaining 14 plants had not been issued as of March 1998.

The table below gives the annual requirement of funds, the funds proposed under plan and funds actually allocated there-against:

NA : Not available

It would be seen from the above table that the planned target for achievement of capacity was much more than the target achievable with the funds allocated. This has to be viewed in the light of 99 per cent increase in cost estimates over the original projections for Tarapur Atomic Power Plant - 3 and 4 as brought out above. Delay in implementation of the plants due to lack of funds was, therefore, further bound to multiply the cost. Moreover, the increased cost of construction would increase the cost of power.

Against the requirement of Rs 15006.50 crore up to 1997-98 for twenty plants and on-going plants, only Rs 2617.41 crore had been allocated for the 'Profile'. As against this, the expenditure incurred was Rs 5291.48 crore, i.e. Rs 2674.07 crore (102.16 per cent) more than the allocation. As the budgetary support could not be maintained by DAE either as debt or as equity, the additional funds of Rs 2674.07 crore were mobilised by NPCIL through Capital Market borrowing. The funds so borrowed included Rs 1443.77 crore for meeting the payment of interest on borrowed funds. The details of funds borrowed were as follows:

DAE stated in February 1999 that since the budgetary support was not adequate even to meet the committed expenditure towards the advance procurement and since NPCIL had to discharge its obligation for payment, borrowing was resorted to as a source of funding for part financing of advance procurement expenditure and therefore interest on such borrowing had also to be included as expenditure towards advance procurement which was not envisaged at the time of initiating advance procurement programme.

In respect of four 235 MW plants under construction, included in the ‘Profile’, against DAE funds of Rs 1578.40 crore allocated as equity and loan, NPCIL incurred an expenditure of Rs 3586.30 crore till 1997-98. These projects were stated to be in the advanced stages of completion. In respect of 10 future plants (four 235 MW and six 500 MW), only Rs 1039.01 crore had been allocated by DAE till 1997-98 which was less than the requirement for a single 500 MW plant. No funds had been allocated for the remaining six 500 MW plants.

DAE stated that availability of funds was not a problem till VII Five Year Plan (up to 1985). With a view to accelerate the Nuclear Power Programme as per profile of 1984 and to access the additional fund from market borrowing, the earlier Nuclear Power Board was incorporated as NPCIL in 1987.

The actual expenditure against this was Rs 1705.18 crore as detailed below:

Note: IDC Interest during construction

DAE reduced the total capacity of 7880 MW envisaged by the Committee to 6050 MW in August 1990. This was further reduced to 3820 MW in March 1994. Even the six plants sanctioned with capacity of 1940 MW had not been completed and therefore, there had been no addition to the capacity under the ‘Profile’ as of March 1998.

DAE stated in February 1999 that due to inadequate budgetary support during early 1990s, the target of the ‘profile’ was slashed down to 8050 MW by 2002 AD.

Even if budget constraint was the only reason for slashing down the target, it could not be scaled down below the limit of the capacity for which advance procurement has already been made.

Even the six plants sanctioned with capacity of 1940 MW has not been completed and therefore, there had been no addition to the capacity under the ‘Profile’ as of March 1998.

The Committee appointed to review the 'Profile' had presumed that advance action would be needed for procurement of material with long lead-time for delivery. In respect of four 235 MW plants sanctioned prior to 1989, the advance procurement of material had already been made. In addition, DAE had taken approval of the Cabinet for advance procurement of material and equipment for Rs 1328.40 crore for 10 plants with total capacity of 3940 MW (including six 500 MW plants) during February 1986 to July 1988, on the ground that lead-time of three to four years was required from importing the raw material for fabrication of finished goods. Lack of matching action in other areas and constraint of funds, without which the material and equipment could not be utilised resulted in the material lying unused for long time. Out of the ten plants, financial sanctions were issued in respect of only two 500 MW plants in January 1991. Another sanction for procurement of equipment valued at Rs 182.04 crore was obtained from Cabinet in January 1991.

DAE stated in February 1999 that setting up of site infrastructure, obtaining environmental clearance from State and Central Government and obtaining construction commencement clearance etc. had been completed. The site infrastructure included fenced land, approach road, job shacks, warehouses etc. Design and engineering and development works have also progressed. However, audit scrutiny disclosed that the progress made in works did not match with the progress in procurement of material.

Some of the finished goods including equipment had been stored at different locations for the past one to nine years as may be seen from the following illustrations noticed during test-check:

 

Sl. No	Supplier	Item and date of purchase order	Payment to supplier (Rs in crore)	Status of execution of order	Status as of March 1998
1	BHEL	Four Turbo-generators in March 1989	301.53*	Order reduced to two Turbo-generators in October 1997; Order for other two was short closed by taking over semi-finished goods	Components for first Turbo generators set received from 1992 onwards are stored in a shed at site
2	KSB, West Germany	Primary Coolant Pump Motor set consisting of 4 Pumps and 5 Motors in July 1988	38.59	Order completed in March 1990	Stored at site wrapped in aluminium foil with silica gel since March 1990
3	KSB, Pune	Primary Coolant Pump Motor set consisting of 4 Pumps and 5 Motors in July 1988	26.32	4 Pumps completed in March 1996; Work on motors not yet taken up	4 Pumps stored at manufacturer’s site

 

Sl. No	Supplier	Item and date of purchase order	Payment to supplier (Rs in crore)	Status of execution of order	Status as of March 1998
4	KSB, Pune	4 Primary Coolant Pump Motor sets consisting of 4 Pumps and 5 Motors each in July 1988	88.27	Order kept under hold	Raw material is stored at the site of the supplier
5	L&T	6 orders for Steam generators, End Shields and sub-assemblies during January 1989 to April 1991	122.43Y	Order kept under hold	Free issue material and semi-finished components stored at supplier’s premises
6	KBL	11 canned motor moderator pumps	10.49	Order completed	Stored with vacuum sealed packing since 1997
7	WIL	5 Calandria with one pair of End Shield assemblies and Pressuriser equipment during July 1988 to April 1990	7.19	Calandrias completed during January 1992 to October 1994; order for other items closed	Calandrias stored at manufacturer’s site; Free issue material and semi-finished goods stored at manufacturer’s site in sheds.
8	ECIL	Imported Self Powered Neutron detectors	3.24	Order completed for one 500 MW plant	235 Self Powered neutron detectors lying at Trombay Village Stores since 1990
9	BHPV	4 sets of moderator heat exchangers in November 1989	1.11	Order agreed to be short closed by taking over semi-finished goods	Semi-finished goods yet to be taken over
10	GRE	One Calandria assembly in February 1989	0.50	Short closure by taking over semi-finished goods agreed	Semi-finished goods yet to be taken over

* Including Rs 21.32 crore for short closure of order.

Y Free issue material - Rs 78.19 crore, advance - Rs 44.24 crore.

¤ Since taken over as per the reply of the Department of February 1999.

Note: BHEL: Bharat Heavy Electricals Ltd.; KSB: A German firm having a branch at Pune; L&T: Larsen and Toubro Limited; KBL: Kirloskar Brothers Ltd.; WIL; Walchandnagar Industries Ltd; EIL; Electronic Corporation of India Ltd.; BHPV; Bharat Heavy Plates and Vessels; GRE; G.R. Engineering Works.

The equipment worth Rs 1069.61 crore stood stored at various sites including manufacturer’s sites. This included raw material valued at Rs 119.28 crore procured during January 1986 to September 1992 which were lying unused at Trombay Village stores.

DAE stated that the advance procurement of material cost was less than 10 per cent of the total project cost.

The reply had to be viewed in light of the fact that when there was a financial crunch even for this expenditure of 10 per cent, the possibility of arranging 90 per cent of the funds to make use of 10 per cent already invested on procurement was not an easy task. While confirming that the items procured in advance cannot be sold, DAE stated that the items procured were mostly custom made to suit the requirement of Nuclear Power plants and hence may not find use in other industries.

While the cabinet had been informed that advance procurement was necessary in view of the long lead-time required for fabrication of equipment from raw material, these had not been utilised or issued for the purpose of fabrication. A test-check of stock cards pertaining to stock valued at Rs 50.48 crore revealed that these material were stored in open yard without any water/rust proof coating. As a result, the coating initially provided with the material started deteriorating. The material was covered with water proof and ultraviolet resistant fully welded tarpaulin only in May 1995.

While the funds stood blocked in these equipment, expenditure was incurred on their storage. The expenditure on storage could not be worked out as no separate accounts were kept for this purpose. It was, however, seen that Rs 12 lakh had been spent on procurement of primer required for preservation of carbon steel plates and beams at Trombay village stores. The expenditure incurred for cleaning and application of primer was estimated at Rs 44.73 lakh. For storage of goods at the site of Walchandnagar Industries Limited, sheds had specifically been constructed at a cost of Rs 15 lakh.

DAE stated that in view of deferment of commencement of the project, a task force was formed in February 1995. The responsibility of the task force included assessment of materials at Trombay village stores for their condition and urgent action for suitable rust prevention wherever required. The task force carried out their responsibility. Subsequently, due to continued resource crunch, in October 1996 the Committee was reconstituted and the scope of the task force was widened to include long term preservation of the material, equipment and components lying at Trombay stores, manufacturers premises and sites.

Since the equipment had been lying unused for a long time, there was very little chance of their replacement or rectification by the suppliers, if these did not work satisfactorily at the time of installation.

NPCIL stated in June 1998 that as the pumps and components were being preserved with due protection based on manufacturer’s guidelines, the question of their deterioration during storage did not arise.

The reply of NPCIL should be viewed in the background of the fact that there was no performance warranty from the manufacturers for satisfactory performance after indefinite storage. Moreover, the Primary Coolant Pump Motor sets were designed for a life of 40 years whereas these had already been stored for nine years i.e. 23 per cent of their designed life. As the financial sanctions in respect of four 500 MW and four 235 MW plants, for which material/equipment were procured had not been issued as of March 1998, there was no possibility of immediate use of the equipment worth Rs 523.86 crore procured for these plants. Consequently, there was a risk of obsolescence and deterioration besides recurring inventory carrying cost and interest burden. A status report on advance procurement of material prepared by Chief Engineer (Corporate Planning) in March 1997 revealed that the possibility of disposal for any sizable value was difficult due to the specialised and custom made nature of the items.

DAE stated, in February 1999, that ageing is stress related and depends on parameters which are encountered in actual working condition, while under storage the equipment sees parameters far smaller in value resulting in practical no ageing. It also added that in commissioning these equipment in future, any reconditioning or repairing if required or replacement of limited shelf life items can be done by in-house as well as with the help of the industry. Any expenditure in that regard will not be significant. It further added that the designs have evolved over a period of time and have several advanced features. Therefore, risk of obsolescence for the material procured may not arise.

The reply had to be viewed in light of the fact that BARC had to constitute two task forces for rust prevention to reduce the risk of ageing. The reply regarding subsequent repairs and expenditure thereupon was presumptive and has to stand the test of time in future.

Standing Committee of Tenth Lok Sabha on Energy, in its thirty fourth report titled ‘Nuclear Power Programme - an Evaluation’, submitted in December 1995, observed that the handling of the Profile was not satisfactory. The Standing Committee also observed that though efforts had been made to divert/dispose off the items, the only possibility in disposal was to salvage the scrap value. Since the plants were not likely to be completed in near future and the equipment were left with only scrap disposal value, the entire expenditure on advance procurement of material for the plants for which financial sanctions had yet not been issued, had to be viewed as infructuous. This could have been avoided by restricting the number of plants within the limit of funds available.

DAE stated that nuclear power programme of setting up of these units for which advance procurement action had been taken still stands. It added that only the timing of commencement will be consistent with fund availability. Moreover, these items in future would cost more if the factors like cost escalation, exchange rate variations are considered.

The reply was not acceptable in view of the fact that the timing for at least a part of power generation could have been advanced within the resources available if proper matching action had been planned for all the related activities rather than merely concentrating on advance procurement.

DAE further stated that under present restriction and embargo, the decision to go for advance procurement of equipment and materials was further reinforced.

The reply was not acceptable in view of the fact that the embargo has been imposed after a decade of procurement of equipment.

The Committee appointed to review the profile, in its report, observed that available indigenous industrial infrastructure should be used in a balanced manner by appropriate planning to meet the requirement of the 'Profile'.

Payment of Rs 17.83 lakh was made to ECIL for training of personnel at Thermocoax, France to enable them to indigenise the production of Self Powered Neutron Detectors. ECIL was also required to get the technological know-how for this purpose. Payment of Rs 3.07 crore was made to ECIL for transfer of technology. While the technology was transferred and the personnel were trained, no indigenously manufactured Self Powered Neutron Detectors were procured from ECIL as of June 1998.

DAE stated, in February 1999, that since the construction of two of the plants had commenced, the quantity required for second unit will be procured from ECIL.

A Primary Coolant Pump-Motor set consisting of four pumps and five motors, was imported from KSB, West Germany. The coolant Pump-Motor set received from KSB, West Germany was stored in wrapped condition. For indigenisation, an amount of Rs 26.32 crore was paid to KSB, Pune for fabrication and supply of first indigeneous Primary Coolant Pump-Motor set. The payment of Rs 26.32 crore included Rs 2.35 crore for technology transfer by imparting training and exchange of documents/technology to KSB, Pune. After indigenisation, KSB, Pune was to supply four more Primary Coolant Pump-Motor sets for which Rs 88.27 crore was paid to them. Against the order of production of the first indigeneous Coolant Pump-Motor set, while the pumps had been manufactured, the motors had not been manufactured. As such the objective of indigenisation had not been achieved. The material issued to KSB, Pune for the Coolant Pump-Motor sets was lying unused with KSB, Pune.

2.1.9 Consultancy

For consultancy relating to various works of 500 MW plants, 58 consultancy contracts, including two foreign contracts of Rs 6.09 crore, were entered into with various consultants during 1985 to 1993. A total expenditure of Rs 50.12 crore was incurred on these consultancies till March 1998. While the cost of consultancy could be apportioned to the twelve 500 MW plants, the entire cost of the consultancy got apportioned to only two of the plants as the financial sanction in respect of other 10 plants had not been issued. The relevance of the consultancy to other plants, if sanctioned, due to passage of time and development of technology elsewhere in the world was doubtful. Thus, the average cost of consultancy amounted to Rs 25.06 crore per plant in stead of Rs 4.18 crore per plant.

Of the 58 consultancies, 49 were completed till March 1998. Work in respect of five consultancies was in progress whereas three consultancies were short closed and one was kept pending. Examination of eight of the consultancy contracts revealed as follows:

• Rs 8.20 crore was spent on consultancy work for design, engineering, inspection services etc. in respect of 500 MW plants at inland site by Tata Consulting Engineers while no plant at 'inland site' had been sanctioned as of March 1998.
  

• In case of two contracts with Tata Consulting Engineers for general engineering consultancy for coastal site and adoption of American Concreate Institute code, the total estimated cost was Rs 26.43 crore. While only 50 per cent work had been completed till March 1998, an expenditure of Rs 25 crore (95 per cent ) had already been incurred.

DAE stated, in February 1999, that due to regulatory requirements, upgraded design, safety standard etc., the quantum of work increased. Besides, the design of 500 MW PHWR was being done for the first time.

• While fee of Rs 3.76 crore was paid for know-how design of a steam generator to a foreign firm and BHEL, the orders for fabrication of the steam generator had been put on hold.
  

• Fuel handling system developed at Rs 1.07 crore, had not been installed and tested as of November 1998.
  

• While thermal and mechanical design consultancy was completed at Rs 27.67 lakh, the order for supply of heavy water heat exchangers placed on BHEL was short closed.
  

• A consultancy contract for improvement of computer code “CLAIR” for study of accidents due to loss of coolant in Pressurised Heavy Water Reactors was entrusted to a firm at an estimated cost of Rs 35 lakh in January 1991. As the firm closed down their business, the contract was closed midway in August 1997 without recording any specific reasons. After making a final settlement of Rs 10.55 lakh for foreclosure of work, the balance job was completed with in-house facility.

The Committee appointed to review the profile had expressed that advance action on tendering main plant civil works would be desirable so as to be in a state of readiness to award the work when financial sanction for the plant was received. In order to set up the site infrastructure facilities, sites for the programme needed to be identified and approved in advance and then developed. This was considered essential by the Committee in the context of public acceptability and lead time required for various clearances. Nevertheless, the site and civil works had to keep pace with the fabrication of equipment to prevent these from remaining idle after fabrication.

Though the financial sanctions for two plants of 500 MW was issued in January 1991 and advance procurements had already been made, the land required for the plants had not been acquired as of September 1998. Thus, the land acquisition had not been completed even after a delay of more than seven years against two years envisaged in the 'Profile'. Against total area of 207 hectare of land required for setting up of these two plants, the actual land in possession was only 120 hectare. Though land acquisition awards were declared for 193 hectare, possession of the land would not be available till Government of Maharashtra took up and completed a rehabilitation plan for the displaced persons. The probable time for completion of these programmes was also uncertain.

NPCIL stated in September 1998 that they had adequate land for location of main plant buildings and commencing construction activities.

The reply was not tenable in view of the fact that commencement of work without possession of entire land would leave uncertainty about completion of the work. DAE already had similar experience in case of Narora Atomic Power Plant and Kakrapar Atomic Power Plant where resistance from the owners of land had led to delays.

DAE stated, in February 1999, that the acquisition of remaining land was being pursued with Government of Maharashtra and it did not envisage any problem in this regard. The remaining land was required for exclusion zone and for township which in no way would affect the construction.

2.1.11 Power generation

Against the targeted additional power generation of 940 MW by 1995-96, gradually increasing to 7880 MW by 2001 AD, the actual additional generation of power under the ‘Profile’ as of March 1998 was nil in spite of having incurred an expenditure of Rs 5291.48 crore. Had the material been procured according to availability of funds and other related factors such as procurement of land, civil works and infrastructure been given corresponding importance, at least a part of power proportionate to the funds available could have been generated.

The action of initiating the work relating to a number of plants disproportionate to funds available was the main reason for failure of the 'Profile'. DAE, however, decided to launch two more Pressurised Water Reactors with installed capacity of 1000 MW each at Kudankulam, Tamilnadu in spite of continued shortage of funds for the plants for which material had already been procured. The equity proposed to be released for these two reactors outside the ‘Profile’ up to 2006 AD was estimated at Rs 5734 crore notwithstanding the fact that the gap in the allocation for the plants included in the ‘Profile’ was also required to be met during this period.

DAE stated, in February 1999, that 880 MW of power would be added to the installed capacity by 2000 AD. The reply had to be viewed in the light of the fact that even this projection of DAE turns out to be only 11 per cent of the projection under the ‘Profile’.

A mention was made in Para 3.2 of Report of the Comptroller and Auditor General of India for the year ended March 1997 about unilateral deduction of Rs 11.90 crore by Gujarat State Fertilizers Company (GSFC) for six tonne of Ammonia against the agreement for compensation for loss of one tonne of Ammonia per day and failure of Department of Atomic Energy (DAE) to recover the excess amount claimed by GSFC.

For routing ammonia through HWP, DAE was to pay a compensation of 2.5 per cent of total cost of production subject to a maximum of Rs 12.50 per kg of heavy water produced and further subject to the condition that transit loss of ammonia did not exceed one tonne per day. Similarly, for excess ammonia produced as a result of increase in the capacity, SPIC was to pay Rs 63 lakh per annum to DAE for first ten years and Rs 40.50 lakh per annum thereafter.

DAE revised the compensation payable to SPIC in May 1993 from Rs 12.50 per kg to slab rates ranging from Rs 40 per kg to Rs 350 per kg. The revised rates were given retrospective effect from April 1992. In October 1997, these rates were further revised retrospectively with effect from April 1995 to range between Rs 55 per kg and Rs 480 per kg. At this stage DAE also agreed to revise the rates again in April 2000. While the increase in the rate of compensation was not justifiable as brought out in the succeeding paragraph, DAE was negligent in not revising the rate of recovery for excess ammonia produced out of the facility set up in SPIC by them.

Increase in the rates resulted in a total payment of Rs 1.47 crore against the amount of Rs 24.95 lakh payable under the contract during 1992-98 leading to undue benefit of Rs 1.22 crore to the joint sector company, which could have been avoided if the payment had been made as per terms of the contract.

Heavy Water Board stated in June 1997 that as there was a substantial increase in cost of inputs and efforts involved on the part of SPIC in maintaining the purity level, deuterium concentration and pressure of the inlet gas to HWP, SPIC was insisting for increased compensation.

The reply was not acceptable in view of the facts that the increase in input cost got reflected in the cost of production of ammonia which was sold/utilised by SPIC. Besides, SPIC had derived advantage of increased production of 100 tonne of ammonia per day through investment made by DAE. Moreover, in a similar agreement of July 1973 between DAE and GSFC, the rate of compensation of Rs 11.25 per kg for total production of heavy water at HWP, Baroda had not been revised since 1973.

DAE stated in January 1999 that the basic intent of the agreement with SPIC was to pay compensation linked to the cost of production of heavy water. It further added that the agreement with SPIC did not provide for any increase in the rate of payment by SPIC to DAE.

The reply of DAE ignores the fact that despite the provision for the amount of compensation linked to the cost of production of heavy water, the payment was to be linked to a ceiling of Rs 12.50 per kg of heavy water produced. There is, therefore, no justification in increase of the amount of compensation beyond the ceiling. Further while DAE has paid compensation at rates higher than the maximum amount provided in the agreement, the contention about their inability to revise the payment by SPIC to DAE due to absence of any such provision in the agreement is self-contradictory.

The question whether a launch being maintained by Bhabha Atomic Research Centre (BARC) by incurring huge expenditure, not commensurate with its utility, should be retained has been under consideration of the Department of Atomic Energy (DAE) since February 1989 on which no decision had been taken as of March 1998.

Due to indecision on the retention of launch since February 1989, questionable expenditure of Rs 57.07 lakh had been incurred during 1991-98 and further expenditure continued to be incurred.

While DAE did not clarify the reasons for indecisiveness for seven years on the proposal of BARC, it supported the views of Internal Financial Advisor of BARC wherein he had stated that in the event of VIP visitors including foreigners, which is not an uncommon event, it takes very long time to take them to BARC by road owned and operated by Mumbai Port Trust which was very dirty and generally not in good condition creating an adverse impression.

The reply was not tenable in view of the fact that the launch had been used for foreigners only on three occasions during October 1991 to January 1998 and DAE had not examined the possibility of renting a launch on such occasions.

Directorate of Purchase and Stores (DPS), Department of Atomic Energy (DAE) placed orders for the electric resistance vacuum annealing furnace and electric resistance high vacuum sintering furnace for refractory metals during November and December 1989 with the scheduled date of delivery as December 1989 and March 1991 respectively for installation at BARC. The furnaces were considered essential for a project “Development of processes for production and fabrication of reactive and refractory metal alloys”. The project was scheduled for completion in two phases during Sixth and Seventh Five Year Plan.

Against the scheduled date of delivery in December 1989/March 1991, the furnaces were received in December 1993 and March 1994 respectively. Meanwhile the space earmarked for vacuum annealing furnace had been utilised for some other purpose and another space was allocated for annealing furnace, which lacked inbuilt infrastructure facility for its installation. As a result while the sintering furnace had been installed, the annealing furnace had not been installed until December 1998.

DAE stated in December 1998 that it must be appreciated that BARC was a multiple-disciplinary R&D institution and there were conflicting pressures amongst various specialisations to locate their facilities.

The reply was not tenable in view of the fact that the importance of expenditure incurred on all the projects had to be recognised in spite of multiple disciplines and while allocating an alternative space for annealing furnace, the basic infrastructure facilities required should have been taken note of.

The project for which these furnaces were essential, was completed by utilising the small-scale facilities available with Material Group, Atomic Fuel Division of BARC and Nuclear Fuel Complex, Hyderabad. This indicated that BARC could have managed the project even without procuring these furnaces and the entire expenditure on the purchase of the furnaces was avoidable.

BARC stated in October 1997 that these furnaces when installed, would be used extensively on a large scale for current and future activities. DAE stated in December 1998 that furnaces would be extensively used in the extended phase II of the project. DAE further stated that Rs 22.59 lakh constituted a negligible percentage of the total cost of equipment of Rupees four crore sanctioned for the project.

The reply of BARC underscores low concern for realising the value for money as not only have they been unable to use the two furnaces for over four and half years since their supply and for over eight and a half years since the need for their purchase was first felt but even the professed extensive large scale use for current and future activities had not been initiated.