TN coal import scam: NGO alleges Rs 3000 crore loss to the exchequer

Scam couldn't have been carried out without former CM Jayalalithaa's knowledge, alleges Arappor Iyakkam.

news Corruption

Two days after a CBI probe into an alleged Rs 487 crore coal scam made headlines, a Tamil Nadu based anti-corruption NGO has said that the rot runs deeper than predicted by the central agency. The Arappor Iyakkam, on Thursday, held a press conference in Chennai to announce that Tamil Nadu has faced a notional loss of over Rs 3000 crore due to irregularities in import of coal.

While the CBI probe pertains to overvaluation of inferior quality of coal imported from Indonesia, the Arappor Iyakkam's expose alleges fraud in a more technical aspect of the transaction. The action of the central agency came after a Directorate of Revenue Intelligence (DRI) investigation which had shown over-invoicing in coal imports between 2011-12 and 2014- 15. According to the NGO, another fraudulent activity also accompanied the irregularity that the CBI is looking into.

"Between 2014 and 2016 TANGEDCO purchased 2.44 metric ton of steam coal from 5 companies. We have accessed copies of tender and purchase orders. Through an RTI we have found that there has been a significant difference between the market price of the imported coal as per specification and the price for which it was bought as per the purchase orders," says Jayaram Venakatesan, Convenor of the Arappor Iyakkam.

Documents presented by the NGO show that purchase orders mentioned the Gross Calorific Value of coal being imported as 6000 KCal/Kg. But the manner in which the Indonesian government measured the coal was different and the equivalent that was given only came up to a Gross Calorific Value of 5500 Kcal/Kg. In addition to this shipping costs were allegedly overplayed by making it seem like the coal was coming from one or more intermediary agents based in a third country.

Who is responsible?

As per its investigation report, the DRI states, “Modus operandi of inflating the procurement price of imported coal was adopted by power generating companies and traders who supplied the imported goods to power generating companies.”

Jayaram alleges, "The then electricity minister Natham Viswanathan and the former Chief Managing Director of TANGEDCO Gnanadikesan, both have a role in this for sure. This over evaluation cannot be done without their green signal. Even former Chief Minister Jayalalithaa seems to have been clearly aware of this coal scam, which is why she gave Gnandikesan a promotion to Chief Secretary for successfully conducting it.”

As far as the importers of coal is concerned, the DRI is investigating 40 companies. The first five all belong to the Adani group. 49% of the coal imported to Tamil Nadu is in fact by the Adani Global Private limited. Other importers to the state include the Tamil Nadu Electricity Board, Chettinad Logistics Pvt Ltd, MMTC Ltd and MSTC Ltd.

Why did they do it?

The DRI has identified two possible reasons for the over-evaluation of imported goods. The first is allegedly to siphon-off money abroad and the second to allegedly avail higher power tariff based on artificially inflated cost of the imported coal.

Investigations have further revealed that while Indonesian coal was directly shipped from Indonesian ports to the importers in India, the import invoices were routed through intermediaries based in Singapore, Dubai, Hong Kong, British Virgin Islands (U.K), etc to artificially inflate value.

"TANGEDCO has been facing huge losses over the years and is under enormous financial strain. The government to make up for all this corruption and resulting losses will increase the power tariff," alleges Jayaraman. "And finally, it is the common man who will be affected."