Lapses cost Tangedco Rs 9,500 crore, finds CAG audit of utility

CHENNAI: The Tamil Nadu Generation and Distribution Corporation Limited (Tangedco) incurred avoidable expenditure of around Rs 9,500 crore on purchasing power at higher cost because its thermal power stations suffered outages due to delayed overhauling and failure to undertake preventive maintenance on time, a Comptroller and Auditor General (CAG) performance audit has found.

The Performance Audit on Power Generation Activities of Tangedco, tabled in the Assembly on Tuesday, flagged deficiencies in thermal power generation, coal procurement and handling, and delays in commissioning power projects.

Poor performance and failure of the ash handling system at NCTPS-II caused generation loss and additional expenditure of more than Rs 130 crore, the audit said.

Coal shortages and purchase of coal at higher prices resulted in additional expenditure of more than Rs 3,900 crore. Tangedco’s failure to adopt the variable-price method for imported coal, instead of the firm-price method, cost another Rs 1,200 crore.

Listing out the lapses, it said despite contractual provisions to claim compensation for coal shortages, Tangedco neither calculated shortages nor claimed compensation from contractors for 2001-24. Also, testing was not done or results were unavailable for 17.55 lakh tonnes of coal.

The audit said acceptance of lower-grade coal forced Tangedco to use additional quantities, causing avoidable expenditure of around Rs 1,500 crore. It also incurred around Rs 250 crore due to pre-berth delays in time charters and made excess idle-freight payments because of deficiencies in the Fuel Supply Agreement.

The CAG noted that a previous audit covering coal management for the five years ending 2018-19 had highlighted similar deficiencies, but most issues continued to persist.

Projects delayed

Thermal projects scheduled for completion before March 2023 remained incomplete, with progress ranging from 18% to 94%, and the utility exceeded the 50-month completion norm prescribed by the Central Electricity Regulatory Commission by 13 to 56 months, it said.

The resultant increase in Interest During Construction, estimated at around Rs 3,600 crore for three projects, is likely to be disallowed by the Tamil Nadu Electricity Regulatory Commission while finalising project capital costs, the auditor cautioned.

The audit also highlighted the failure of the Ujwal Discoms Assurance Yojana (UDAY) to improve Tangedco’s financial position. Tamil Nadu was required to take over 75%, or Rs 56,317 crore, of Tangedco’s debt but took over only Rs 22,815 crore, or 34.38%, citing financial constraints.

The gap between Average Cost of Supply and Average Revenue Realised widened from (-) Rs 0.60 per unit in 2015-16 to (-) Rs 1.07 in 2019-20, while outstanding debt rose from Rs 81,312 crore to Rs 1.23 lakh crore by March 2020, it noted.

The CAG also said the Rs 28,731.74-crore Revamped Distribution Sector Scheme remained at an initial stage, with smart metering yet to take off. State government subsidy and grant support to the utility rose 314%, from Rs 5,947.09 crore in 2013-14 to Rs 24,636.98 crore in 2024-25.