CHENNAI: The CAG reports have revealed that the Tamil Nadu Generation and Distribution Corporation Limited (Tangedco)’s mismanagement and delayed decisions had led to an avoidable expenditure of Rs 5,115.59 crore from 2013 to 2018. The reports state that purchase of power constituted Tangedco’s largest cost element, ranging from 53.34 per cent in 2014-15 to 60.78 per cent in 2017-18.
The cost of power purchase from private parties by Tangedco increased from Rs 11,873.37 crore (24,164.84 million units) in 2013-14 to Rs 3,13,564.33 crore (29,758.38 MU) in 2017-18, because it failed to increase the capacity of its own generating stations, the sub-optimal performance of the own generating stations and slippage in completion of projects by the Central Generating Stations.
The delay in completion of projects by CGS led to Tangedco bearing cost escalation of Rs 2,381.54 crore by way of additional cost in the tariff, besides purchasing the shortfall quantity by incurring an expenditure of Rs 2,099.48 crore. The report highlighted that due to not drawing the entitled share of power from the low-cost CGS and drawing the same quantity from other costlier sources, Tangedco had to spend Rs 349.67 crore. Due to procurement of power from the plant, which was costly and ranked lowest in the Merit Order Dispatch (MOD), and also purchases of power from a naphtha based plant, Tangedco had to spend Rs 3,493.74 crore.
Eight long-term suppliers did not supply power during the first two years of the agreements. However, Tangedco paid an enhanced tariff to them from the third year onwards, resulting in another avoidable expenditure of Rs 712.03 crore for the period up to March 2018. Tangedco did not claim applicable liquidated damages of Rs 24 crore from two suppliers for their delay in deliverables. Instead, it procured the shortfall quantity at higher rates, resulting in it shelling out Rs 1,116.04 crore.
Avoidable Rs 139 cr expense in Tangedco
Due to a delay in the renewal of agreements, TANGEDCO procured shortfall on a day-to-day basis, resulting in another avoidable spending of Rs 139.48 crore. Due to extension of the commissioning period by the Tamil Nadu Electricity Regulatory Commission for solar energy producers, TANGEDCO had to pay a higher tariff for purchase of solar power, which resulted in excess expenditure of Rs 605.48 crore. Further, purchase of power from co-generation plants by terminating the existing agreements and purchasing same power through short term routes resulted in extra expenditure of Rs 93.41 crore.
The report stated that the heavy losses were due to the purchase of power at a higher rate and non-adherence of provisions of Power Purchase Agreements (PPAs). It said the failure of an internal control mechanism was the reason for the heavy loss to State’s power sector.
TANGEDCO invited three bids, from 2013 to 2016, for supply from both the inter-State and intra-State suppliers. While finalising tenders, TANGEDCO kept the intra-State suppliers as a separate group on grounds of getting assured supply. In the process, it concluded agreements with intra-State suppliers at rates higher than the rates finalised with inter-State suppliers.
After scrutinizing all bidding process, CAG worked out that extra expenditure amounting to Rs 31,055.84 crore was incurred by TANGEDCO, due to payment of higher rates for the intra-State suppliers from June 2013 to May 2016.
Solar Energy sector
TANGEDCO had entered into long term (25 years) PPAs with 86 solar PV project developers between 2015 and 2016, for 1,484 MW. Seven developers commissioned their projects before the originally permitted commissioning date and 56 others commissioned it during the extended period.
These 56 developers were also given the tariff as equal to those who commissioned the project within the deadline date, which violated the PPA rules. This led to an excess expenditure of Rs 605. 48 crore for TANGEDCO due to the injudicious decision to go for a preferential tariff route with further additional commitment for the next 23 years.
The report pointed out that the finalisation of long term PPAs under the preferential tariff route for a capacity of 1,484 MW, when the solar power prices were falling, was, therefore, injudicious and only resulted in undue enrichment of the private generators at the cost of TANGEDCO and in turn its consumers.
cag findings
1. The TN government’s ‘lack of commitment’ and ‘casual handling’ of expensive tech systems at Anna Centenary Library resulted in the Rs 7.98 crore spent on creating the assets, remaining ‘largely unfruitful’
2. Improper planning, hasty implementation, delay in land alienation and construction along with non-provision of staff resulted in non-functioning and partial functioning of working women’s hostels
3. Coimbatore Corporation underestimated the quantity of solid waste generated due to incorrect adoption of population base and survey failure