New Delhi: Nullifying Congress’ claim of corruption and wrongdoing in the Rafale fighter jet deal, Comptroller and Auditor General (CAG) report on Tuesday claimed that the deal negotiated by the NDA government to procure 36 fighter jets was 2.86 per cent cheaper than the UPA’s 2007 offer.
With regard to India specific enhancements, the deal was 17.08 per cent cheaper, said the CAG report, which was tabled in Parliament on Wednesday.
The report gives much relief to the Modi government, which has been facing fervent attacks by the Congress over the fighter jet deal. The Centre has repeatedly denied allegations by the opposition party in the Rafale issue.
The report further mentioned that the delivery schedule of the first 18 aircraft, out of the promised 36, is better than the one proposed under UPA’s 126 aircraft deal, by five months.
Going into the methodology of the price comparison, the national auditor said the price offered by M/S Dassault Aviation in April 2008 against the Request For Proposal (RFP) of 2007 was a market discovered price and based on competitive bidding.
The price offer of 2007 had two distinct packages: pricing for 18 flyaway aircraft package and pricing for ToT package for 108 aircraft which were to be licensed produced in India.
The offer of 2015 on the other hand, the CAG said, was only for 36 flyaway fighter aircraft. The acquisition and price bids of 2007 and 2015 were very different as the latter included the price of ToT for license production of 108 aircraft in India which was 77.8 per cent of the total price bid of 2007.
But since the pricing of ToT was a distinct package in 2007, comparison of the remaining package which pertained to 18 flyaway aircraft (one squadron) was somewhat possible if constrained by factors and therefore the Indian Negotiating Team (INT) compared this packages with their corresponding prices in the 2015 price bid for 36 flyaway aircraft (two squadron).
The report, however, was silent on the issue of offset partners, which has been a key point on which the Congress has been attacking Narendra Modi-led government and has been alleging corruption in Anil Ambani’s Reliance Group getting one of the offset contracts.
Soon after the report was tabled in Parliament, Union Minister Arun Jaitley said the lies of the Congress and opposition parties stand exposed as the CAG report outlines that 2016 deal terms were lower in terms of price, faster in terms of delivery, while ensuring better maintenance and lower escalation.
Following the report becoming public on Wednesday, Union Finance Minister Arun Jaitley hit out at the main opposition party.
“It cannot be that the Supreme Court is wrong, the CAG is wrong and only the dynast is right. Satyameva Jayate” – the truth shall prevail. The CAG Report on Rafale reaffirms the dictum,” Jaitley tweeted.
CAG’s Concern Over ‘Letter of Comfort’
Meanwhile, the CAG report has highlighted the drawbacks of settling for a ‘Letter of Comfort’ rather than a sovereign guarantee by the French government. The report noted that the 2007 UPA deal included a 15 per cent bank guarantee against advance payments.
Highlighting its concerns, the CAG observed that in case of a breach of agreement, India would now have to first settle the matter through arbitration directly with the French vendors.
If the arbitration award goes in favour of India and Dassault Aviation, the makers of the Rafale jet, fails to honour it, India will have to exhaust all available legal remedies, it said. Only after that will the French government make the payments on behalf of Dassault Aviation, it added.
Since about 60 per cent of advance payments were to be made to the French vendors, the Ministry of Law and Justice advised that a government/sovereign guarantee should be requested in view of the value of the proposed procurement, the report said.
However, the French government and Dassault Aviation neither agreed to furnish the bank guarantees nor a government/sovereign guarantee, it stated.
“Instead it provided a ‘Letter of Comfort’ signed by the French Prime Minister in lieu of the Bank Guarantee,” the report said.
The issue on sovereign guarantee and ‘Letter of Comfort’ was submitted to the CCS in September 2016 for consideration.
The French government, the report said, did not agree to an escrow account as it felt “the guarantees already provided by it were far reaching and unprecedented”.
“In case of any breach of agreement Indian party (Ministry) would have to first settle it through Arbitration directly with the French vendors. If the Arbitration award were in favour of Indian party and the French vendor fails to honour the award (make the payment’s claim), Indian party should exhaust all available legal remedies. Only then the French Government would make these payments on behalf of the vendors,” the report said.