A routine preventive check by the Vigilance Department has exposed a huge scam in the purchase of High Speed Diesel (HSD) by the Indian Railways from national oil companies in one of the zones.
According to Railways sources, an audit of HSD purchase by the North East Frontier Railway revealed excess payment to the tune of ₹243 crore made to the Indian Oil Corporation Ltd. and the Bharat Petroleum Corporation Ltd. during January-September 2022.
The investigators informed the Railway Board of the irregularity and directed the Principal Financial Advisor, North East Frontier Railway, to recover the excess payment made to the oil companies. While asking other zones to check if any excess payment was made at their end, the Vigilance Department urged to “set up a system to avoid such irregularities in future”.
Payments under scanner
After the alert, payments made to national oil companies across the 16 zones of the Indian Railways have come under the scanner. “We will conduct an internal audit to check the payments made to oil companies. We are aware of the scam in another zone. The Railways purchase HSD in huge quantity and even a small change will run into several crores of rupees,” a senior official in the Southern Railway told The Hindu on Monday.
The North East Frontier Railway operates trains with diesel locomotives across five divisions — Tinsukia, Lumding, Rangiya, Alipurduar and Katihar — and purchases HSD in large quantities, the official who preferred not to be quoted said.
Explaining details of the excess payment, the Vigilance Department in its letter to the Railway Board said going by the invoices raised by the oil companies, the rates charged were found to be “approximately 25-40% more than the maximum retail prices of HSD at the nearest petrol pumps, thus abnormally increasing the cost of fuel to Railways.”
‘Purpose vitiated’
It further states that the issues needed to be looked into at the Railway Board level, “as the basic purpose of entering into long-term contracts is vitiated without getting price advantage.”
In accordance with the clauses under the rate contract with oil companies, statutory price variations would be allowed subject to documentary evidences, with no other variation permitted.
However, price allowed at a particular supply location shall not exceed the market rate of HSD (price of nearest petrol pump in the same location).
Acting on the alert issued by the Vigilance Department, the North East Frontier Railway authorities took steps to recover part of the excess payment made to the oil companies and adjust the balance in subsequent bills. The excess payments were made in violation of Clause 12(a) of the Railway Board’s Rate Contract with the oil companies, the sources added.
