DNP sustained crores of revenue loss: CAG

Staff Reporter

GUWAHATI, April 9: All is not well with DNP Limited – with the CAG reporting that this public sector unit (PSU) sustaining a net revenue loss of Rs 6.73 crore due to non-revision of transportation tariff on account of variation in fuel cost.

DNP Limited is a joint venture company formed by AGCL, NRL and OIL for transportation of gas from Duliajan to Numaligarh with a pipeline in 2009 and commissioned in 2011. With AGCL holding more than 51 per cent equity in the company, DNP Ltd is essentially a subsidiary of AGCL which assigned the gas transportation agreement (GTA) to it. 

In its report on PSUs for the year ended on March 31, 2017, the CAG said that DNP Limited had not revised the transportation tariff of NRL despite variations in the prices of tural gas. “Owing to non-revision of transportation tariffs on account of variation in fuel cost as prescribed in the GTA the company had to sustain a net loss of Rs 6.73 crore during April 2011 to March 2017,” the CAG report said.

The CAG also found DNP Ltd on the wrong foot for not covering the entry tax of Rs 4.79 crore from NRL as a transportation component tariff due to its omission to include the same in the project cost.

The company commissioned the pipeline project in March 2011. Based on the actual project cost of Rs 379.25 crore, the company fixed transportation tariff of tural gas in March 2011. “It planned to recover the project cost along with the ‘Return on Investment’ within a span of 25 years. In August 2015 and March 2017 the company paid Rs 4.79 crore as entry tax to the Government of Assam on the procurements made against the work order issued in April 2008,” the report said, and added: “The audit observed that the above project cost did not include the entry tax component, which was paid (August 2015 and March 2017) after more than four years (March 2011) of fixing the transportation tariff. The company also capitalized the amount of entry tax in its accounts (2016-17). It, however, could not recover the corresponding increase in the project cost of Rs 4.79 crore through transportation tariff.”

DNP Ltd is also tainted with the charge of undue favour to contractors. According to the CAG report, the company extended undue favour to the extent of Rs 1.20 crore to contractors due to irregular release and non-deduction of welfare cess in violation of the extant Rules.