Rajasthan Warehousing Corporation Audit Uncovers Rs 1.57 Crore Undue Benefit to Private Firm
An audit report released last week has placed the Rajasthan State Warehousing Corporation (RSWC) under intense scrutiny. The investigation revealed that the corporation extended an undue benefit of Rs 1.57 crore to a private firm by opting for a less favourable revenue-sharing arrangement, despite having access to more beneficial contracts. This finding raises serious concerns about procurement practices and transparency in public sector operations.
Background of the Warehouse Acquisition
In April–May 2018, RSWC faced an urgent demand for storage of essential commodities such as wheat, gram, and mustard. To address this need, the corporation sought additional warehouse facilities. During this period, two key offers were presented:
- Shree Shubham Logistics Ltd offered facilities at 33 locations with a total capacity of 3.76 lakh metric tonnes. This proposal came with a standard rent and a favourable 70:30 revenue-sharing arrangement, where RSWC would receive 70% of the revenue.
- Star Agri Warehousing and Collateral Management Ltd provided an alternative offer with a capacity of 1.16 lakh metric tonnes at 16 locations. However, this deal involved a less favourable 58:42 revenue-sharing ratio, significantly reducing RSWC's potential income.
Audit Findings and Financial Impact
Audit scrutiny uncovered that RSWC chose to utilise Star Agri's warehouses at 10 locations, leaving 88,823 metric tonnes of Shree Shubham's more beneficial capacity unutilised. This decision resulted in a direct loss of Rs 1.57 crore in storage income for RSWC, with a corresponding undue benefit accruing to Star Agri. The audit highlighted the lack of competitive bidding and transparency in this procurement process.
Government Defense and Audit Rebuttal
The state government defended RSWC's actions by citing Section 31(1)(b) of the Rajasthan Transparency in Public Procurement Act, 2012. This provision allows for single-source procurement in emergency situations. Officials argued that Shree Shubham failed to provide facilities at several locations, justifying the choice of Star Agri. However, auditors found no documentary evidence to support this claim of denial by Shree Shubham. Furthermore, no penal action was taken against Shree Shubham, casting doubt on the validity of the government's defense.
Recommendations for Future Procurement
The audit report emphasised that RSWC had sufficient time to initiate competitive bidding. For instance, tenders for the subsequent Kharif season were finalised within just 7 days, achieving a more favourable 74:26 revenue-sharing ratio. To prevent such distress arrangements and safeguard public revenue, the audit concluded with key recommendations:
- Standardise revenue-sharing formulas across all procurement deals to ensure consistency and fairness.
- Conduct procurement transparently with proper documentation and competitive processes, even in urgent scenarios.
- Enforce stricter adherence to transparency norms in public sector contracts to avoid similar financial losses.
These findings underscore the critical need for improved governance and accountability in RSWC's operations, urging a reevaluation of procurement strategies to protect public funds effectively.
