Regulators

MIB criticised for violating contractual norms for national film museum construction

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NEW DELHI: The Ministry of Information and Broadcasting (MIB) failed to secure compliance with provisions of the contract before releasing advance payments to National Buildings Construction Corporation for the National Museum on Indian Cinemas (NMIC) leading to blocking of funds while the intended objective of commissioning the Museum for public remained unfulfilled.

Rejecting the reasons given by the Ministry, the Comptroller and Auditor General has said in its latest report that the Ministry prematurely released payments without observing linkages with various milestones of construction activity and their completion. 

Out of a total sum of Rs 88.11 crore released to NBCC between March 2010 and March 2011, only Rs 36.72 crore had been utilised leading to blocking of substantial sum with the NBCC.

CAG said there was no provision of advance payment except payment on signing of contract between the Ministry and the NBCC.

The Films Division of the Ministry had in 2010 initiated a project on turnkey basis of constructing the NMIC in the Films Division Complex at Mumbai proposed to be commissioned for public during the centenary year of Indian Cinemas in 2013. 

Under the contract, the estimated cost of work was Rs 101.20 crore with expected date of completion being June 2012. 

Under clause 7 of the contract, the payment to NBCC was to be based on actual cost of all the works of the project and it included all the costs as paid to contractors/suppliers etc. Payments to NBCC were to be released on completion of various milestones as specified in the contract. 

NBCC had to submit report for requirement of funds and while submitting the invoice it had to certify that it had completed the activity as per schedule. In terms of clause 10 of the contract, NBCC had to submit quarterly report indicating physical and financial progress of the work.

The CAG examination of records disclosed that the Ministry in contravention of the terms of contract, released funds to NBCC without linkages with the specific milestones as provided in the contract. It also did not ascertain the actual progress of work before releasing payments.

CAGt also observed that the required statutory approval from Municipal Corporation of Greater Mumbai was obtained by the Ministry only in August 2013. The Ministry had thus released more than 85 per cent of the estimated project cost (Rs 88 crore out of Rs 101 crore) even before obtaining the required statutory approval.

It was also noted that NBCC could incur expenditure of only Rs 36.72 crore out of released amount of Rs 88.11 crore as of December 2014, resulting in blocking of substantial sums for different durations during the period March 2010 to December 2014.

When this was pointed out, the Ministry said in February this year that since the project was to be completed before Centenary Celebration of Indian Cinema in 2013, the Ministry had relaxed/modified the milestones of construction of NMIC, before releasing the funds to NBCC through FD. It also said the NBCC opened a separate Bank Account for the NMIC project. The bank interest was being credited to that account. 

The construction work of the Museum was in progress and according to the revised timeline for completion, the Museum was to be completed and handed over by December 2015.

But CAG noted that the reply of the Ministry did not address the issue of premature release of funds without synchronising the payments with the progress of work. 

Furthermore, the fact remained that the Ministry failed to secure compliance with the provisions of the contract before releasing advance payments to NBCC leading to blocking of funds while the intended objective of commissioning the National Museum on Indian Cinemas for public remained unfulfilled.

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