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Tangedco coal imports lost Tamil Nadu INR 1,500 crore-CAG Report

Coal News - Published on Wed, 11 Jul 2018

Image Source: SteelGuru
New Indian Express reported that Tamil Nadu Generation and Distribution Corporation has ‘robbed’ the State exchequer of at least INR 1559.81 crore through its coal imports between October 2013 and February 2016, says the Comptroller and Auditor General Report on Public Sector Undertakings for the 2016-17 financial year.Failure to implement variable pricing method, which calculates the price payable at date of import instead of at date of tender opening, and procurement of low quality coal without adjusting prices accordingly are the two major causes for the losses incurred.

The report said that bidders confirmed TANGEDCO asked them to quote higher prices taking into account a possibility of increase in international coal prices, at a period when prices were steadily dipping. The global coal price fell from USD 92.06 per metric tonne in October 2012 to USD 61 per metric tonne in February 2016.

CAG’s analysis of 131 of the 297 consignments of coal imported under five tenders released between October 31 2013 and February 5 2016 shows that not implementing variable pricing increased expenditure by `746.13 crore. CAG also noted that TANGEDCO did not implement reverse auction process despite Central Electricity Regulatory Commission recommendations and thus lost an opportunity to get coal at lower prices.

Between October 2013 and February 2016, TANGEDCO had managed to reduce the quoted price by 1.37 per cent to 19.53 per cent while other PSU’s such as Tamil Nadu Newsprint Limited had achieved a price reduction of 6.49 per cent to 26.94 per cent.All the tenders issued in the period specify coal with a Gross Calorific Value of 6000 Kcal/Kg. The TANGEDCO could adjust the prices for coal with lower GCV. While tests conducted by third party agencies on behalf of TANGEDCO showed only about one per cent variation in GCV, CAG’s independent verification of tests conducted by the Customs Department reveals 82 of the 131 consignments it checked between the three-year-period showed a 3.3 to 25 % deficiency in GCV.

This alone accounts for `607.48 crore of the total `813.68 crore loss to exchequer caused by not acknowledging import of lower quality coal and using the penalty provision.City-based-NGO Arappor Iyakkam in January had alleged that TANGEDCO had procured 6000 GCV coal roughly at the price of 6000 GCV which is a much higher quality.

TANGEDCO had then denied the allegation and claimed prices were being adjusted accordingly.

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Posted By : Joykumar Irom on Wed, 11 Jul 2018
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