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CAG hauls up Nalco for under performance, expensive delay

CAG estimates Nalco wasted an opportunity to earn Rs 1,086.6 crore from 2012 to 2017 because of inadequate power leading to underutilisation of its smelter.

, ET Bureau|
Updated: Jul 19, 2019, 09.22 PM IST
CAG found fault with Nalco’s refinery and mining operations too.
The national auditor has pulled up state-owned aluminium maker National Aluminium Company Ltd (Nalco) for under-performance and delay in developing coal mines allotted to it.

In a report tabled in Parliament on Wednesday, the Comptroller and Auditor General (CAG) said as per its estimate, Nalco wasted an opportunity to earn Rs 1,086.63 crore between 2012-13 and 2016-17 because of inadequate power, leading to underutilisation of its smelter.

In these four years, Nalco saw a production loss of 493,000 tonnes. The company also incurred an additional expenditure of Rs 326.62 crore on excess consumption of coal at its captive power plant due to higher than norms station heat rate (the amount of fuel required to generate one unit of electricity). Its failure to detect slippage of the quality of coal cost it another Rs 239.23 crore, according to the performance and productivity audit report.

Nalco had been allotted Utkal D coal block and re-allotted the Utkal E block in September 2015.

The CAG also found fault with Nalco’s refinery and mining operations. Against a target of 10.735 million tonnes, Nalco produced only 9.631 million tonnes of alumina hydrate, primarily due to lower production of bauxite in the mines. The failure to maintain the required stock level of bauxite and the quality of feed resulted in greater consumption of both bauxite and caustic soda. Despite fixing annual production targets at less than installed capacity, because of high silica in its ore, it still failed to meet its own quantity and quality targets.

The higher silica content in Nalco’s feed raised caustic soda requirement by 146,000 tonnes between FY13 and FY16, costing Rs 426.27 crore, said the report. It noted that Nalco was aware of the technological upgradation it needed that would save it Rs 75.45 crore annually, but took 57 months to order mud-handling equipment.

The CAG also flagged environmental violations by Nalco. The PSU, it pointed out, had committed to using a conveyor belt for transporting ore from its south block mine, but had instead been transporting ore to crushers in central and north block mines in dumpers. Nalco had argued that this had been condoned by the Indian Bureau of Mines. The CAG dismissed this defence saying Indian Bureau of Mines had no authority to waive off conditions in the EC granted by the environment ministry or the consent to operate (CTO) from the Odisha State Pollution Control Board.

"The discharge of red mud and red mud pond effluent at the alumina refinery were consistently higher than the corresponding limits specified by the OSPCB during the period 2012-13 to 2016-2017," said the CAG report.

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