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| Non-performance of contracts: JKPCC losing money | | |
Jammu, Feb 27—
The performance of Jammu and Kashmir Projects Construction Corporation Limited has been found suboptimal by the CAG report as the company has failed to execute works secured on tender basis.
The inability of the company to execute four works, forced the clients to rescind the contracts resulting in loss Rs 20.38 lakh, besides doubtful recovery of Rs 2.75 crore.
As per the Comptroller and Auditor General, Northern Railways awarded three works to JKPCC which includes construction of bridge on the railway track at Bhogpur, blanketing earthwork from Suchi Pind to Cholang.
Due to the non-mobilization of adequate resources by the company, despite getting extension of time, the projects could not be completed.
Consequently, the Railways rescinded the contracts, encashed three bank guarantees worth 1.28 crore furnished by the company as security deposit and awarded the balance works to another agency at the risk and cost of JKPCC.
In a similar instance, the Railways awarded the work of widening the Tilak bridge at New Delhi at the cost of 3.39 crores. However, the piling work done by JKPCC was not found up to the mark by Railway authorities and it terminated the contract.
Due to the termination of the contract, JKPCC suffered a loss of 19.93 lakh incurred on pile testing and mobilization.
Here, it must be mentioned that Company has not maintained any database to indicate the number of works in which it had participated through tenders. As a result the audit report could not ascertain the success rate of the bidding process. It is also to be noted that company had failed to take action on the recommendations of a experts group to ensure participation of the company in the international and national contract in order to enhance profits of the company.
Even the Managing Director admitted that company had not been able to undertake mega-projects due to lack of resources, sufficient machinery, manpower and finances.
The CAG report also mentions that execution of sub-standard work by the company resulted in the client withholding payment of Rs 84 lakh. Likewise, the company incurred expenditure in excess of the deposits received from the project authorities in violation of the prescribed procedures which contributed to mounting receivables. In addition, the audit scrutiny revealed that the company did not comply with statutory requirements of levying service tax and adding it to the cost offers in respect of work executed between 1997 and 2002.
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