CAG raises flags over execution of Yeramarus Thermal Power Station

Anil Urs Bengaluru | Updated on February 18, 2020

The Comptroller and Auditor General of India (CAG) has found objections to the tune of ₹2,907.04 crore in the execution of Yeramarus Thermal Power Station (YTPS) of Raichur Power Corporation Limited, a Karnataka public sector undertaking.

In its performance audit on Public Sector Undertakings, which was tabled in the Karnataka Legislative Assembly, CAG cited multiple reasons for the objections.

The CAG conducted a performance audit on the execution of YTPS to assess the outcomes of the initiatives and factors responsible for under-performance, said Anup Francis Dungdung, Accountant General Karnataka.

Francis said the project delay increased the cost to ₹12,915.90 crore provisionally as of March 2018 from the estimated cost (April 2009) of ₹8,806.23 crore. The cost of generation per unit also increased from ₹3.24 per unit to ₹5.36 per unit provisionally.

While auditing YTPS, it was also observed that the failure of the joint committee to finalise the report on the reasons for delay in completion of works delayed the levy of liquidated damages, which would have had an effect on the total project cost, as the capital cost would be adjusted to the extent by regulatory commission while determining tariff.

According to Anup Francis a total of 23,188.86 million units of power, in the form of short and medium-term power valued at ₹11,079.22 crore, were purchased during 2014-15 to 2017-18. Out of this, additional cost on the purchase of 22,283.03 million units of power (short/medium-term) from private producers amounting to ₹2,517.92 crore was avoidable had the company completed the implementation of the project within the stipulated time.

As for as the other observations, Anup Francis explained that though KPCL was facing difficulties with other projects entrusted to BHEL, it formed a JV with BHEL without exploring the option of going in for a public-private partnership for execution of the project despite availability of various incentivise under the scheme promoted by the GOK.

CAG also pointed out failure to get the benefits (duty concessions) under Mega power status despite entering into PPA in December 2010 resulted in foregoing the benefit of ₹335.01 crore. Failure to finalise type of cooling tower and delay over site and approval of designed also impacted the project.

Due to non completion of railway siding and marshalling yard work also costed the project. Delay in approved DPR and bridge design and due to this there was no rail arrangement to bring coal to the YTPS project.

Published on February 18, 2020

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