Compliance Performance
Tamil Nadu

Public Sector Undertakings Audit Report for the year ended 31 March 2018

Date on which Report Tabled:
Thu 24 Jun, 2021
Date of sending the report to Government:
Tue 09 Jun, 2020
Government Type:
Sector Power & Energy,Transport & Infrastructure


Over view of Audit Report 2018 (PSUs)

Performance Audit on Power Purchase Agreements in Tamil Nadu Generation and Distribution Corporation Limited

The delay in completion of projects by CGS led to TANGEDCO bearing cost escalation of Rs.2,381.54 crore by way of additional cost in the tariff, besides purchase of shortfall quantity by incurring avoidable expenditure of Rs.2,099.48 crore.

TANGEDCO’s failure to adopt Merit Order of Despatch (MOD) for purchase of power resulted in the Tamil Nadu Electricity Regulatory Commission (TNERC) disallowing the cost of power purchase amounting to Rs.18,843.63 crore for tariff fixation during the years 2013-16. 

Due to procurement of power from the plant which was costly and ranked lowest in the MOD and purchase of power from a naphtha based plant, TANGEDCO incurred avoidable expenditure of Rs.493.74 crore.

There were delays in commencement of supplies from the scheduled delivery dates by nine suppliers.  But TANGEDCO did not levy liquidated damages of Rs.827.64 crore.

Eight long term suppliers did not supply power during the first two years of the agreements.  However, TANGEDCO paid enhanced tariff to the suppliers from the third year onwards resulting in avoidable expenditure of
Rs.712.03 crore for the period up to March 2018.

TANGEDCO became liable to pay fixed capacity charges of Rs.122.84 crore due to non-drawal of the committed quantity of power.

TANGEDCO incurred extra expenditure of Rs.1,055.84 crore due to payment of higher rates for intra-state suppliers in comparison to inter-state suppliers, who supplied power during the same period.

Due to extension of commissioning period by TNERC for solar energy producers, TANGEDCO became liable to pay higher tariff for purchase of solar power, which resulted in excess expenditure of Rs.605.48 crore.

Compliance Audit Observations relating to Power Sector Undertakings

The requirement of producing documentary evidence for claiming amount of Wagon Unloading Charges paid to VDLB/VPT was waived by TNEB (now TANGEDCO) during post-tender negotiations, which enabled undue benefit of Rs.807.58 crore to flow to the contractor at the expense of TANGEDCO.  Continuation of the contract, which was a source of unreasonable profit to the contractor, on the same terms and conditions for more than 17 years, without considering alternate options was, thus, unjustified.

Performance Audit on the Functioning of State Industries Promotion Corporation of Tamil Nadu Limited

SIPCOT did not prepare any Long Term, Medium Term or Annual Action Plan stipulating milestones for land acquisition, formation of layout and execution of infrastructure works to operationalise ICs.

The income from land development activities were in the range of 59.63 to 69.35 per cent and the balance from interest from bank deposits. SIPCOT had spent only 53.25 per cent of its earnings on its core activities.

The concentration of nine ICs in Kanchipuram and Thiruvallur districts and absence of ICs in 20 other districts indicated uneven growth of industrial development in the State. 

SIPCOT did not revise the plot cost after December 2014 and was yet to implement the decision of the Board of Directors (December 2016) to increase price after conducting study on the industrial growth, affordability, demand and the extent of land to be allotted.

SIPCOT did not take repossession of 892.74 acres of unused land representing 6.60 per cent of the total allotted land in 12 ICs, out of which, 499.69 acres (55.97 per cent) were in three ICs in the periphery of Chennai.  If these lands were resumed and re-alloted, it would have fetched additional revenue of Rs. 249.94 crore at current rates.

SIPCOT did not monitor the change in management of the allottee units which resulted in loss of revenue of Rs.10.64 crore.

Compliance Audit Observations relating to State PSUs (other than Power Sector)

Electronic Corporation of Tamil Nadu Limited (ELCOT): The procurements were delayed during 2014-15 and 2016-17, consequently 10.50 lakh laptops worth Rs.1,397.80 crore were distributed to the students after their academic sessions depriving themof use of laptops during their studies to acquire computer skills.

ELCOT extended undue benefit to one private company by assigning two acres of land worth Rs. 26.14 crore without collecting the value to satisfy the requirement of Environmental Clearance (EC) norms. Subsequently, ELCOT withdrew such permission in favour of the private company and did not inform the fact to State Level Environmental Impact Assessment Authority.

Tamil Nadu State Marketing Corporation Limited caused a loss of Rs.18.67 crore to the Government on account of non-inclusion of suitable clause for escalation of licence fee in the agreement for running bars by private parties.

Lab facilities created at a cost of Rs. 17.32 crore were lying idle for more than four years on account of failure of TICEL Bio Park Limited to deploy suitable manpower to manage the lab.

Tamil Nadu Civil Supplies Corporation incurred avoidable expenditure of
Rs. 4.11 crore due to failure to invoke the enabling provisions in the agreement for purchase of additional quantity in procurement of Palmolein oil.

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