PowerGrid rapped by CAG for flaws in award of contracts

Our Bureau New Delhi | Updated on January 24, 2018

The Comptroller and Auditor General has found Power Grid Corporation of India Ltd had incorrectly evaluated and awarded seven transmission tower contracts worth ₹927.69 crore to financially weak joint venture companies between February 2010 and July 2010.

The CAG in its report on central companies laid in the Lok Sabha on Friday has found that the incorrect award of the contracts has led to cost overruns, delay in completion of works and transmission constraints.

The awards were made to three joint venture companies led by SPIC-SMO, a division of Southern Petrochemical Industries Corporation. The contracts were for strengthening scheme for Sasan and Munda ultra mega power projects as well as strengthening the central part of the Northern Grid.

“The fact remains that the Board (of PGCIL) decision was based on favourable recommendations of the assessment committee which downplayed the actual financial condition of SPIC and did not report crucial information about impeding sale of SPIC-SMO,” the report stated.

The assessment committee comprised representatives from finance, engineering and contract services department of PGCIL.

Meanwhile, the report also raised concerns about Steel Authority of India Ltd’s ₹42.77 crore investments in 12 joint venture companies which have not started commercial operations.

“Despite adequate management structure, there was no effective oversight over the affairs of the joint venture companies,” the report stated. The CAG also severely criticised Uranium Corporation of India’s system of tendering.

“The company had not prepared a works contract manual even after 47 years of its formation to lay down guidelines for contract finalisation and execution,” the report said.

Published on July 31, 2015

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