The Hindu Business Line : CAG points out deficiencies in NTPC gas-based plants' working

The Comptroller and Auditor General of India (CAG) has documented glaring deficiencies in the six gas-based power plants of National Thermal Power Corporation (NTPC) from concept to commissioning.

In a recent report on public sector undertakings in general and review of activities of select PSUs in particular, the CAG covered the operational performance of all the six gas-based power plants of NTPC. The ensuing performance audit showed that "availability of committed supply of primary fuel was not ensured at the time of conceptualisation of the plants and actual supply was much less than the quantity assured by the Government of India (GoI)".

It said whereas 14.17 million cubic metres per day (MCMD) of gas was required to utilise the generating capacity of 3,657.64 MW created at the six gas-based power projects, the actual availability was 12.75 MCMD, sufficient only to operate plants at 66 per cent of the capacity.

CAG said that though the GoI was primarily responsible for assignment of requisite gas for power stations to ensure availability to cater to the generation capacity created by the company, NTPC also needed to properly assess availability of gas at the initial stage of DPR/FR to effectively control cost in the interest of the beneficiaries.

Shortfall in gas supply

Analysis of data about the supply of gas by GAIL to each plant during the period 1999 to 2004 showed that the shortfall in supply of gas to Dadri plant ranged between 9-18 per cent and to Faridabad plant between 19-67 per cent. The combined supply to Kawas and Gandhar plants fell short by 10-34 per cent. The report said the quantity of gas committed by GAIL was always less than the respective requirement of Auraiya, Dadri, Gandhar and Kawas plants for generation at utilisation factor of 73.5 per cent.

Stating that GAIL did not generally purvey gas even up to the committed level, which increased dependence of the plants on costlier fuel such as naphtha, the report said that there was lower generation of power when operated on alternate fuel due to higher auxiliary power consumption, leaving less units of power for sale by NTPC. It further noted that the beneficiaries were unwilling to purchase costlier power generated on naphtha resulting in impairment of the efficient working of the plants.

Generation loss

Accordingly, due to operation of the gas plants on alternate fuel, there was loss of generation of 5,727 million units (MUs) of power during the span from 1999-2000 to 2003-04, of which the maximum loss of 3,393.69 MUs was attributed to the Auraiya plant. Analysis of generation revealed that the loss increased from 813.81 MUs in 1999-2000 to 1,290.24 MUs in 2003-04.

The CAG said that it was not convinced of the management response that there was no loss of capacity with alternate fuel since this did not take into account the fact that the number of units available for sale got slashed due to higher auxiliary power consumption.

Expansion projects

NTPC has also been criticised for expansion of four projects without ensuring availability of primary fuel, despite having experience of failure in getting assured supply of primary fuel in the past. As beneficiaries declined to take costlier power generated on naphtha, the company deferred the expansion after incurring an expenditure of Rs 23.68 crore, out of which the sum of Rs 17.56 crore was not likely to be utilised till the end of 2011-12. CAG hastened to add that in view of non-availability of gas and the escalating trend of cost of gas, the company's plan to add another 4550 MW in the Tenth and Eleventh Plans on gas might require "re-look" given the present scenario.

Pact with GAIL

The report also draws attention to the agreement the company entered into with GAIL where in the event of short lifting of gas, the company was required to pay for the minimum guaranteed quantity of gas. There was no corresponding clause in case of short supply by GAIL This made the company liable for an amount of Rs 12.09 crore.

It said the tariff fixation policy of the Central Electricity Regulatory Commission allowed the generating company to recover full fixed charges based on declared capacity, even though actual generated units were below the declared capacity. As a result, the beneficiaries had to bear an excessive charge of fixed cost to the tune of Rs 123.45 crore during 2003-04.

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