TANGEDCO at a loss for words after Arappor ‘calls out’ its rebuttal

Adani is among four firms ( Adani, MSTC, Knowledge International Strategy Systems, Chettinad Logistics) which benefitted a violation of the Tamil Nadu Tender Transparency Act.

Published: 01st February 2018 02:17 AM  |   Last Updated: 01st February 2018 11:29 AM   |  A+A-

Image used for representational purpose only.

By Express News Service

CHENNAI: Four days after the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) rubbished, Arappor Iyakkam’s allegations of a multi-crore coal scam, the city based NGO has come out with evidence to suggest the TANGEDCO has provided false information in its rebuttal.

In the rebuttal sent out on Saturday, TANGEDCO had claimed that it has procured coal of Gross Calorific Value (GCV) between 5800 - 5900 Kcal/kg Gross As Received (GAR) because coal of GAR value corresponding to the 6000 Kcal/ kg Air Dried Basis, mentioned in its tenders was not listed on the coal index.

The corresponding GAR equivalent of 6000 Kcal/ kg ADB being 5604.

However, Arappor Iyakkam has pointed out that coal having GCV of 5500 GAR and 5700 GAR are listed on the Harga Batubara Acuan and Harga Patokan Batubara indices which are released by the Indonesian government every month.

“These two indices are an average of four indices including the Argus ICI and Platts Kalimantan indices which the TANGEDCO claims to have used while procuring coal. These indices are released so companies which mine and sell coal don’t undervalue/ cheat them (Indonesia) on royalty and tax payments,” said the statement from Arappor Iyakkam.

“It is unlikely that the TANGEDCO, which procures coal for an entire State could have been so naive not to know the existence of the two indices,” Jayaram Venkatesan, the convenor of Arappor Iyakkam told Express.

The TANGEDCO in its rebuttal also claimed that the procurement prices of the 5800-5900 Kcal/ kg GAR ( Coal of higher GCV than required) which had been procured were accordingly adjusted.

The TANGEDCO however did not clarify how exactly the prices were adjusted.

Procurement orders accessed by Arappor Iyakkam reveal that between October 2012 and August 2013, the TANGEDCO had procured coal three times. During this period, the prices of coal on the Argus Index, (which the TANGEDCO claims to have used for procuring coal) showed 1.5 to 2 $ increase for every 100 Kcal/kg GAR increase in GCV.

The Argus price per metric tonne of 5800 kcal/kg GAR coal in October 2012 was 72 $. So, if the price was adjusted, the procurement price sans shipping should have been changed to 69 $ ( taking 1.5 $ as the change in price per 100 Kcal/kg GAr).

Adding the shipping charges at the time which was found to be around 7 $, the procurement price should have been 76 $ but the TANGEDCO’s procurement price is between 92 and 95 $, a 16-19 $ increase in procurement price.

When Express contacted officials in the TANGEDCO on Wednesday, they said GCV was not the only criteria for procurement.

“We also look at moisture content and sulphur content in the loads and penalties are levied if they are of inferior quality,” said Sathiyaseelan, Chief Engineer, Coal, TANGEDCO.

However, the “penalties” don’t explain why the procurement prices exceeded the market prices by 16-19 $ instead of bringing the procurement price down.

Electricity minister, P Thangamani, who was quizzed about Arappor Iyakkam’s allegations in a press conference on Wednesday, claimed that the Tamil Nadu government procures coal “only through MMTC”, a central government enterprise, while refuting all allegations of irregularities.

However, a list of procurement orders between 2012 and 2016 accessed by Arappor Iyakkam through RTI show that TANGEDCO had procured coal through MMTC only once in May 2013 and the remaining 18 procurements are from a mix of private and public players.

Interestingly, out of the 2.44 crore metric tonnes of coal obtained from Indonesia, 49 % ( 1.19 crore metric tonne ) was procured from Adani Global PTE ( a company registered in Singapore ) Tender Violation

Adani is among four firms ( Adani, MSTC, Knowledge International Strategy Systems, Chettinad Logistics) which benefitted a violation of the Tamil Nadu Tender Transparency Act which mandates a 30-day tender period.

The Procurement order for tender number 52 which was released on February 5, 2016 is dated February 29, 2016.

When Express contacted the TANGEDCO regarding the violation, a senior official said that the “election and model code of conduct coming into play” was the reason behind the expedited procurement.


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