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BHEL spent Rs 16.69 cr on staffs’ late night snacks, says CAG report

BHEL spent Rs 16.69 crore to fund its employees’ late night snacks in violation of government guidelines, the CAG said in an audit report
New Delhi: State-run Bharat Heavy Electricals Limited (BHEL) has spent Rs 16.69 crore to fund its employees’ late night snacks in violation of government guidelines, the Comptroller and Auditor General (CAG) of India has said in an audit report. “BHEL extended undue benefit to its employees towards payment of Late Night Snacks Allowance (LNSA) to the tune of Rs 16.69 crore, in violation of the guidelines of DPE (Department of Public Enterprises) as well as its own Personnel Policy,” the CAG said. The CAG audit report pertains to the Heavy Power Equipment Plant (HPEP) unit of BHEL at Hyderabad.

What is late night snack allowance at BHEL?

The LNSA is an allowance that is extended to employees who work till late in the night. In a circular announcing wage revision in February 2010, BHEL had said that employees would be entitled to late night snack allowance at the rate of Rs 100 per night per employee for shifts extending beyond midnight. The order was effective from January 1, 2010 until December 31, 2014. The allowance rate was later raised to Rs 175 per night with effect from January 1, 2015.

So, why does CAG have an issue with BHEL giving LNSA?

Extending LNSA to employees working late in the night is not against the government norms. However, the CAG has flagged the bill incurred by BHEL because of two reasons. Firstly, the late night snack allowance, which was meant for employees working late in the night, was also extended to other staff who were engaged in another shift. The Hyderabad unit had started operating a third shift from September 1, 2014 — which started at 11 pm and went on till 7 am next day — in the identified work centres of various production blocks on need basis. The LNSA was meant for staff engaged in the third shift but was extended to employees in the second shift as well, the CAG said. Secondly, the benefit was extended to executives and supervisors in violation of Department of Public Enterprises’ (DPE) guidelines. According to the DPE rulebook, instead of having a fixed set of allowances, PSUs allow their employees to choose allowances under the ‘cafeteria approach,’ subject to a ceiling of 50 percent of basic pay. The other kinds of allowances that are outside the 50 percent ceiling include, Northeast Allowance, Allowance for underground mines, Special allowance for serving in difficult and far flung areas, and Non-practicing allowance. However, the LNSA extended to executives and supervisors by BHEL was placed outside the 50 percent ceiling. This was when the DPE clearly states that in case of executives and supervisors, no allowance/ benefit/perks is admissible outside the list of allowances prescribed ceiling of 50 percent of basic pay.

BHEL’s LNSA bill

“A review of the records pertaining to the period from 2014-15 to 2017-18 in Heavy Power Equipment Plant (HPEP) unit of BHEL at Hyderabad revealed that the unit paid an amount of Rs 3.72 crore (Annexure-II) to its executives and supervisors on account of LNSA in contravention of DPE guidelines…  Audit observed that during September 2014 to March 2018, HPEP unit paid LNSA to the workers who were engaged in the second shift. This resulted in excess payment of Rs 12.97 crore,” the audit report said. The total LNSA bill incurred by the BHEL unit thus went up to Rs 16.69 crore.

BHEL’s response

According to the CAG report, the BHEL management said that they extended the allowance to employees of the second shift, keeping in mind the time taken for commuting back home after duty. However, the auditor dismissed the contention, saying that LNSA was to be paid to only those workers who worked in shifts extending beyond midnight, ie, the third shift.