It failed to recover Rs.280.37 crore slapped as fine for short supply power.

Power suppliers in Tamil Nadu contracted to provide short-term power received an undue benefit of Rs. 280.37 crore as the Tamil Nadu Generation and Distribution Company (Tangedco) failed to impose fines on suppliers for short supply of power, according to a CAG report.

Under the short-term power purchase contracts between 2010 and 2014, the tender conditions stipulated that suppliers were liable to pay compensation to Tangedco if they failed to supply 80 per cent of the monthly contracted quantity.

But, in seven tenders, there was a short supply of 2,649 million units, for which a compensation of Rs.280.37 crore should have been levied. “However, Tangedco neither recovered the compensation as per the agreement till August 2014 nor recorded any justification for such non-recovery which resulted in extension of undue benefit to the supplier to that extent,” the audit said.

Observing that the system for short-term power purchase suffered from many deficiencies, the report said, “There is an urgent need to have a long term perspective in planning procurement of deficit power by Tangedco.”

The audit also found that Tangedco finalised multiple tenders for the same supply period with rates fluctuating between Rs. 3.30 and Rs. 6.95 per unit.

“Due to operation of many tenders with the same supply period, the suppliers took advantage of the higher rates and supplied maximum quantity of the tender with higher rates without fulfilling their supply obligation for the tender with lower rates,” the report said.

The audit also found that the department suffered an additional loss of Rs.21.64 crore over a joint venture signed with BHEL without receiving environmental clearance, apart from suffering a delay of seven years.

“Tangedco entered into a JV agreement with BHEL and handed over the EPC responsibility on nomination basis even before arranging the coal linkage which resulted in the JV becoming unworkable,” the report said.