CAG finds chaotic financial management in Kudankulam Nuclear Power Project

Rips NPCIL for lack of transparency in availing loans, lapses in tariff fixation process and inadequate monitoring.

Published: 28th December 2017 02:34 AM  |   Last Updated: 28th December 2017 12:14 PM   |  A+A-

By Express News Service

CHENNAI: The Comptroller and Auditor-General (CAG)’s performance audit report on Kudankulam Nuclear Power Project (KKNPP) Units 1 and 2, which was tabled in Parliament on Wednesday, exposed major financial mismanagement to the tune of thousands of crores.

The report says there was lack of transparency in availing loans, lapses in tariff fixation process, favouring overseas collaborating partner and inadequate monitoring. The audit was conducted to assess whether Nuclear Power Corporation of India Limited (NPCIL) exercised prudent financial management in the construction/commissioning of Units 1 and 2.

Audit findings have clearly established the fact there were many shortcomings. In fact, NPCIL, on December 31, 2014, declared commercial operation of the Unit I of KKNPP, which was six months before receiving the licence from the Atomic Energy Regulatory Board (AERB) for regular operation of the plant.

To start with, NPCIL is accused of paying Rs 449.92 crore additional interest on Russian credit unreasonably. There was a delay of four years in completion of works by M/s Atomstroyexport (ASE), a company responsible for undertaking the Russian scope of work. However, there was no revision of schedule of repayment of the Russian credit. This resulted in start of repayment of Russian credit, before revenue generation. The power corporation has also been blamed for going for external borrowings at a high interest rate resulting in payment of additional interest of Rs 76.02 crore. The loan of Rs 1,000 crore availed of from HDFC Bank is found to have violated CVC guidelines on tendering.

This apart, NPCIL has suffered a revenue loss of Rs 947.99 crore due to unplanned shut downs for 222 days as against the scheduled 60 days and Rs 90.63 crore was lost while fixing tariff for power since the corporation did not take into account the interest paid on foreign debt and domestic borrowings.

NPCIL has even failed to initiate any claim for recovery of additional expenses of Rs 264.79 crore, which was caused due to delayed completion of works by ASE. There were cost overruns observed in purchase of equipment to the tune of Rs 99.47 crore. NPCIL neither assessed the extra payments/loss due to non supply/defective supply of materials by ASE nor did it initiate any action for recovery/adjustments for the same, the CAG report said.

The report said NPCIL did not pursue claims for liquidated damages worth Rs 463.08 crore for ASE even though during the same time it was borrowing funds and paying interest to discharge debt obligations, including from ASE. An additional expenditure of Rs 706.87 crore was incurred while commissioning Nuclear Steam Supply and Turbo Generator from the Russian scope to Indian scope. Besides, NPCIL did not ensure reasonability of the rates of third party supplies worth Rs 899.95 crore. Meanwhile, the CAG report has listed out several recommendation to put the house in order.

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