CAG raps fisheries board for failed project to provide shrimp seeds to farmers

Report finds loopholes in agreement to set up seed multiplication centre

By Soma Basu
Published: Wednesday 18 December 2013

The Comptroller and Auditor General (CAG) of India has rapped the National Fisheries Development Board (NFDB) for incurring “unfruitful expenditure” of Rs 5.82 crore after it failed to set up a facility that aimed to provide farmers disease-free seed of black tiger shrimp.

In 2006, the Union Ministry of Agriculture (MoA) had decided to set up a Specific Pathogen Free Multiplication Centre (SPF-MC) in India as a joint programme by importing disease-free seed of black tiger shrimp (Penaeus monodon) from reputed international companies and supplying them to shrimp farmers of the country. The decision was prompted by shortage of disease-free shrimp brood stock in the country.

It was decided to consider Hawai-based M/s Moana Technologies’ proposal for bringing the seeds to India. The firm gave a detailed presentation on proposed SPF-MC in December 2006. In February 2007, a due diligence team constituted by MoA visited the facilities of the firm in USA to inspect them, assess the level of technology and work out on the details of the project. After inspection, the team gave a go ahead to the firm. NFDB, an autonomous body under the administrative control of MoA, entered into an agreement with the firm in March 2008, the CAG report, tabled in Parliament on December 13, states.

Advance payment
The report says that concluding an agreement without ensuring parties’ financial capabilities, coupled with injudicious decision to make 90 per cent payment to the firm on submission of drawings, led to the project not getting established even after a lapse of seven years, rendering an expenditure of Rs 5.82 crore unfruitful. The objective of supplying disease-free seed to Indian shrimp farmers also remains unachieved, the report says.

The agreement was for establishment of a complete SPF-MC facility by NFDB on a 40 hectare plot in Srikakulam district in Andhra Pradesh as per the conceptual design of Moana at an estimated investment (excluding land cost) of US $5.2 million (Rs 21 crore). Total payment of US $ 600,000 to Moana ($300,000 after signing of agreement and on submission of conceptual drawing, $240,000 on acquisition of and and submission of final blueprints of drawings and balance $60,000 on successful commissioning of SPF-MC) was also agreed upon.

NFDB made the payment of US$ 540,000 to Moana in March 2008 after the submission of conceptual drawings and final blueprints of drawings by the firm. CPWD submitted proposal in August 2009 and revised proposal in December 2009 for the project work of setting up SPF-MC at an estimated cost of Rs 47.12 crore in the land acquired at a cost of Rs 2.85 crore in Srikakulam district. However, NFDB did not sanction tender call to construct SPF-MC since document to prove acceptance of payment of 5 per cent licence fee by MTIPL-JVC (Indian joint venture on the revised estimate) could not be furnished.

NFDB issued legal notice on July 2011 to Moana for not respecting the terms and condition of agreement. In response, M/S MTIPL in August 2011 and Moana in November 2011 blamed each other for the delay in establishment of the centre. Further, no efforts were made by NFDB to get over the stalemate.

In March 2012, the agricultural ministry while admitting that the process was delayed, attributed it to the “unforeseen developments between Moana and MTIPL”. It also said that the proposal for Moana was critically reviewed by MoA and NFDB and it was felt that obtaining technology from Moana would be beneficial. Further, on the date of signing the agreement, there was no room to doubt the financial health of the organisation, MoA had stated. It further stated that their efforts were on to facilitate further dialogue between NFDB and Moana or to put the acquired land to alternate use.

CAG says the ministry’s reply shows that no due diligence about financial health of the partner was carried out before the execution of the agreement. Fact remains that nothing concrete had emerged out of the dialogue and the land was not put to alternate use as of April 2013. Thus, despite spending 5.82 crore (including 2.17 crore paid as consultancy fees to foreign company) on the facility, the envisaged SMPF-MC could not be established and the intended benefit of supplying disease free seed to farmers remained unfulfilled even after a lapse of seven years of decision, the report says.


Report of the Comptroller and Auditor General of India on Autonomous Bodies

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