Chennai, Sept 9:
Tamil Nadu Generation and Distribution Corporation Limited (Tangedco) incurred avoidable expenditure of around Rs 9,500 crore due to purchasing power at higher costs amid thermal plant outages, coal procurement lapses and delays in commissioning projects, a Comptroller and Auditor General (CAG) performance audit has found.
The Performance Audit on Power Generation Activities of Tangedco was tabled in the Tamil Nadu Assembly on Tuesday and flagged deficiencies in thermal power generation, coal procurement and handling, preventive maintenance and implementation of power projects.
According to the audit, thermal power stations suffered outages because overhauling was delayed and preventive maintenance was not undertaken on time. Poor performance and failure of the ash-handling system at North Chennai Thermal Power Station-II resulted in generation losses and additional expenditure of more than Rs 130 crore.
Coal-related shortcomings accounted for a substantial portion of the avoidable expenditure. Coal shortages and procurement at higher prices resulted in additional expenditure of more than Rs 3,900 crore. Tangedco’s decision to use the firm-price method rather than the variable-price method for imported coal cost another Rs 1,200 crore.
The CAG also pointed out that despite contractual provisions permitting compensation claims for coal shortages, Tangedco neither calculated shortages nor claimed compensation from contractors during 2001-24.
Testing was either not carried out or test results were unavailable for 17.55 lakh tonnes of coal, the audit said.
The acceptance of lower-grade coal forced Tangedco to use additional quantities, resulting in avoidable expenditure of around Rs 1,500 crore. Another Rs 250 crore was incurred because of pre-berth delays in time charters, while deficiencies in the Fuel Supply Agreement resulted in excess idle-freight payments.
The CAG observed that similar deficiencies had been highlighted in an earlier audit covering coal management for the five years ending 2018-19, but most of the problems continued to persist.
The audit also highlighted delays in thermal power projects that were scheduled to be completed before March 2023. Their progress ranged from 18% to 94%, while the projects exceeded the 50-month completion norm prescribed by the Central Electricity Regulatory Commission by 13 to 56 months.
The delays resulted in an estimated increase of around Rs 3,600 crore in Interest During Construction for three projects. The CAG cautioned that this amount could be disallowed by the Tamil Nadu Electricity Regulatory Commission while finalising project capital costs.
The audit also examined Tangedco’s financial position under the Ujwal Discoms Assurance Yojana. Tamil Nadu was required to take over 75% of Tangedco’s debt, amounting to Rs 56,317 crore, but took over only Rs 22,815 crore, or 34.38%, citing financial constraints.
The gap between the Average Cost of Supply and Average Revenue Realised widened from Rs 0.60 per unit in 2015-16 to Rs 1.07 per unit in 2019-20. Tangedco’s outstanding debt increased from Rs 81,312 crore to Rs 1.23 lakh crore by March 2020.
The CAG further noted that the Rs 28,731.74-crore Revamped Distribution Sector Scheme remained at an initial stage, with smart metering yet to take off. At the same time, State government subsidy and grant support to the utility increased by 314%, from Rs 5,947.09 crore in 2013-14 to Rs 24,636.98 crore in 2024-25.4.