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CAG flags big variation in coal movement data of Tangedco

Our Bureau Chennai | Updated on June 25, 2021

Against linkage of 106.97 MMT, Tangedco received 71.82 MMT of coal during 2014-19

 

The report of the Comptroller and Auditor General of India on public sector undertakings for the year ended March 31, 2019, has found a lot of variation on movement of domestic coal for Tamil Nadu Generation & Distribution Corporation Ltd (Tangedco) carried through the State-owned Poompuhar Shipping Corporation (PSC) for five years from fiscal 2014 to fiscal 2019.

There was a big variation in the quantity of indigenous coal, as the cross verification of the quantity moved in accordance with the annual reports of PSC vis-a-vis TANGEDCO Coal Data Book (CDB). The data in its CBMS revealed variations in all the years (as per table).

 

The difference in the quantity moved as per the PSC records and Tangedco’s CDB was marginal to the extent of 2.53 lakh MT, whereas the difference between CBMS and CDB was significant to the extent of 21.18 lakh MT. Even though the differences persisted in all the five years, Tangedco was yet to reconcile these figures and reasons for these discrepancies resulting in reporting inaccurate data on coal movement.

Also read: Railways: Cargo movement picks up pace, over 10,000 t of O2 moved to 13 States

Prompt and periodical reconciliation of CBMS and CDB with the PSC records would ensure correctness of the quantity moved, and timely action on the variation in quantity could be taken.

The cost of coal constituted 95.54 per cent to 98.41 per cent of the total cost of generation at Tangedco during 2014-2019. The cost of coal plays a key factor in the fixation of tariff.

The audit of coal management in Tangedco’s thermal power stations (TPS) revealed that against the linkage of 106.97 million metric tonnes (MMT), Tangedco received 71.82 MMT of coal during 2014-19 (25 to 41 per cent of the annual contracted quantity). To offset the short supply, Tangedco resorted to import of coal but did not impose a penalty on coal companies as per Fuel Supply Agreement (FSA).

The execution of the import coal substitution scheme was tardy and benefited Tangedco only to the extent of 31 per cent of the agreed quantity of high-grade indigenous coal. No penalty was levied. However, Eastern Coalfields Ltd (ECL) claimed extra-contractual performance incentive to the extent of ₹65.43 crore.

While moving the coal from North Chennai to Mettur by railways, the actual transit loss exceeded the permissible limit in 47 out of 60 months (78 per cent) to the extent of 3.85 lakh MTs of coal valued at ₹58.37 crore. But Tangedco could not recover the excess transit loss from the contractor due to non-availability of enabling provisions in the agreement with the coal handling contractor.

Tangedco made payment for minimum guaranteed quantity of 1,008.43 lakh MT of coal against the actual moved quantity of 642.79 lakh MT of coal, thereby incurring an unproductive expenditure of ₹55.34 crore.

The failure of the coal handling contractors to load coal up to the permissible carrying capacity of the Railway wagons resulted in payment of freight of ₹101.35 crore (15.74 lakh MT of coal) without beneficial use.

There was no significant improvement in specific coal consumption in power stations despite blending high-quality imported coal with domestic coal. Tangedco did not take appropriate measures to avoid the inefficiencies in procurement, handling, quality assessment, and consumption of coal, which resulted in increased expenditure to Tangedco and consequent higher energy charges to consumers, the report said.

The auditor recommended review of all provisions of FSAs to protect the financial interests of Tangedco. A specific provision in FSAs may be incorporated for levy of penalty on coal companies for monthly shortage of coal.

Review coal handling contracts across TPSs to ensure standardisation and incorporate best and economical practices, record and determine transit loss as well as coal shortages periodically, to avoid undue benefits to contractors. Faulty contracts may be reviewed and short closed if the revised contractual terms are not mutually acceptable.

Responsibility may be fixed on the officials for not incorporating the clause for recovery of excess transit loss while awarding the contract to CREW for transportation of coal from Kamarajar Port to MTPS I & II, the report said.

Published on June 25, 2021

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