Rashid Paul

SFC’s losses accumulate to Rs 250 cr; CAG punches wholes in its working

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Points to arbitrary manner of allotting timber extraction as one of many irregularities

Srinagar: Undue favors to contractors for extraction of timber and many other irregularities are bleeding the Jammu and Kashmir State Forest Corporation (J&KSFC), with its losses now having accumulated to around Rs 250 crore.

A report presented by the Comptroller and Auditor General (CAG) of India on April 06, 2022 reveals that the accumulated losses of the Corporation turned Company stood at Rs 249.13 crore as of March 2020.

The report referred to the attributions of the management of the SFC that it suffered losses worth crores of rupees due to the unfavorable business environment arising out of the scrapping of the special status and bifurcation of the erstwhile state of Jammu and Kashmir.

The auditor said “the SFC suffered loss worth of Rs 15.33 crore during 2017-18 due to increase in direct expenditure and administration expenses. It also suffered losses of Rs 4.14 crore during 2018-19 and Rs 3.99 crore during 2019-20.”

It further said “the SFC management also attributed (November 2021) losses to the implementation of Goods and Service Tax from July 2017 and re-organization of J&K UT (Union Territory) after August 05, 2019.”

Interestingly the company had earned a profit of Rs 16.25 crore and Rs 15.36 crore during 2015-16 and 2016-17, respectively.

The CAG report said “the functions of the SFC included removal of trees from forests and their disposal, exploitation of forest resources, and undertaking research programmes relating to forest and forest products.”

However, it has restricted itself to removal of trees from forests and carrying out sale of timber only, it added.

The national auditor’s report said “royalty of Rs 395.67 crore was payable by the company to State Forest Department for markings of trees. Forest area was categorized on unrealistic parameters leading to incorrect fixation of rates for extraction transportation of timber.”

The auditor found that contactors, Amani mates had abandoned work without converting the markings. Accumulated losses on account of timber was Rs 283.89 crore which were neither made good nor written off.

The audit observed that after preparation of project report for extraction and transportation of timber, the company starts the process of allotment of work by inviting tenders or the work is directly allotted on Amani basis (engaging labour mates) without inviting tenders.

Analysis in audit showed “works for 77.76 lakh cft (51.76 percent) were allotted on Amani basis out of which 54 works for 33.54 lakh cft were allotted breaching the limit of 40,000 cft or 20,000 cft”.

It revealed that out of 573 extraction works, only 122 works were allotted on tender basis. Besides, multiple works were allotted to same Amani mates, thereby defeating the purpose of allotment of work to small and petty contractors.

Citing an instance of gross forest plunder, the auditor found “in Ganderbal, out of 9.28 lakh cft allotted during 2015-20, two lakh cft (22 percent) was allotted to one Amani mate who was a Class A contractor registered with the company.”

The auditor said “the SFC had neither devised any criteria nor made any roster for selection of Amani mates and work was being allotted on the application of selective Amani mates, thus giving them undue favor”.

The CAG report disclosed “allotment of works on Amani basis was also awarded to contractors registered as Class A indicating works being given to bigger contractors without tendering”.

Also, delay in execution of works was noticed in works executed on Amani basis as well, the report said.

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