The final cost of the Vijaipur expansion project has now been calculated at Rs 1,070.60 crore, against the approved figure of Rs 987.3 crore, including a foreign-exchange component of Rs 349.4 crore. The project hoped to produce 7.26 lakh tonnes of urea a year.

The state-run firm faced liquidity crunch between April and August, 1996, owing to IDBI's decision to stop further disbursement in the aftermath of the scam.

The move resulted in delayed delivery of critical equipment for the expansion work. More than three months were lost in procuring equipment for want of payment. Actual delay in completion of the project was more than six months.

The project was scheduled to be commissioned within 36 months, but took six months more, causing cost overrun. The department of fertiliser has just secured the union cabinet's clearance for the increased project cost.

While justifyingthe delay to the cabinet, the department of fertiliser and the state-run firm pointed out a host of additional factors, as well. For example, they argued that the project-completion schedule was based on an assumption that all pre-project activities, including contract finalisation and down-payment to consultants, would be completed before the contracted date.

The ministry and the state-run firm said approval of Haldor Tosoe AS consultancy contract and down-payment took three months. They also said a request for re-setting the zero date to January 1, 1994, was made by National Fertilizer, since work on the project could start only after down- payment was released to the process licensors and technology suppliers.

The fertiliser department said the proposal was considered in consultation with the Planning Commission and the department of expenditure of the finance ministry. Later, the Public Investment Board (PIB) was also involved in obtaining the approval, the cabinet was told.

Yet another cause forthe project delay, the state-run firm said was the indigenous vendors' failure to supply on time some of the critical packages. National Fertilizer said it was chiefly because of simultaneous start and common sources for procurement for its Vijaipur unit and Iffco'S Aonla project, which resulted in increased burden for vendors and sub-vendors in the country and abroad.

A sizable expenditure was incurred by installing gas-turbine generator as recommended by consultants during implementation of the project, the company was told.