Reliance got undue favour of Rs 229 crore in Y’nagar plant: CAG | india | Hindustan Times
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Reliance got undue favour of Rs 229 crore in Y’nagar plant: CAG

india Updated: Mar 17, 2016 15:51 IST
Bhartesh Singh Thakur
Bhartesh Singh Thakur
Hindustan Times

The comptroller and auditor general (CAG) has pointed out an undue favour of Rs 229 crore to Reliance Energy Limited (REL) in the construction of Deenbandhu Chhotu Ram Thermal Power Plant (DCRTPP) at Yamunanagar.

According to the audit report on public sector undertakings for 2014-15 tabled in the assembly on Monday, the Haryana Power Generation Corporation Limited (HPGCL) awarded the contract for construction of two units of 300 MW each to REL in March 2004 at firm price of Rs 2,097 crore, which included Rs 1,572 crore for supply of machinery and equipment and Rs 525 crore for civil works and erection, testing and commissioning on turnkey basis.

As per terms of the contract, the final takeover (FTO) was to be done on completion of all outstanding works. The audit observed that the HPGCL decided to effect the FTO on March 15, 2013, and released Rs 73.54 crore to REL after making deductions on account of non-supply of mandatory spares of Rs 6.40 crore and works carried out at risk and cost of REL at Rs 0.44 crore besides an amount of Rs 6.86 crore incurred on repair of the turbines of units 1 and 2, despite non-completion of outstanding works valuing Rs 155.78 crore. z“This non-deduction of the cost of incomplete works and the release of payment of Rs 73.54 crore on FTO was an undue favour to REL and compromised the financial interests of the company to the extent of Rs 229.32 crore,” says the CAG.

“The government and management in their reply stated that the above amount was included in the counter claims filed in the arbitration case in August 2014. The reply is not acceptable as the management was aware of the above pending works at the time of FTO and such amount was recoverable from the contractor,” says the CAG.

The plant, manufactured by SEC, China, was supplied to DCRTPP in 2004. Due to the breakdown of unit 1 and its repair without invoking the contract performance guarantee, the HPGCL had to bear a generation loss of 1,900.52 million units (MUs) and resultant non-recovery of fixed cost of Rs 191.95 crore during 2012-13. Similarly, unit 2 faced problems. Due to shutdown, the company bore a generation loss of 2,625.23 MUs and non-recovery of Rs 293.16 crore in 2011. Even after the overhaul, unit 2 remained under forced shutdown for 2,156 hours, leading to loss of Rs 74.40 crore.


The story of Rajiv Gandhi Thermal Power Plant (RGTPP), Hisar, is also similar. Despite the commencement of commercial operations of unit 1 and unit 2 of the plant on August 24, 2010, and March 1, 2011, respectively, the units were frequently tripping.

This was attributed to economiser tube leakage, boiler tube leakage and turbine bearing vibration, a result of incomplete works on the part of R-Infra (the new name of Reliance Energy Limited).

In order to complete the outstanding works, shutdowns of 8,305 hours were provided to R-Infra beyond contractual provisions leading to a generation loss of 207.63 MUs and consequential non-recovery of fixed cost of Rs 256 crore. The audit observed that despite these shutdowns, the two units suffered 61 and 52 trippings from 2012 to 2015.