PCL centralised system draws CAG flak
OVER NINE months ago, the UP Power Corporation Ltd (UPPCL) replaced the decentralised system of material purchase with the centralized one. The HT had then smelled a rat and published a report quoting sources that alleged that it was mainly the charm of hundreds of crores of rupees being doled out by the Centre under the Rajiv Gandhi Rural Electrification programme that had led the officials to centralise the system denying any role in awarding contracts etc., to the subsidiary power companies.india Updated: Jan 20, 2006 01:12 IST
OVER NINE months ago, the UP Power Corporation Ltd (UPPCL) replaced the decentralised system of material purchase with the centralized one. The HT had then smelled a rat and published a report quoting sources that alleged that it was mainly the charm of hundreds of crores of rupees being doled out by the Centre under the Rajiv Gandhi Rural Electrification programme that had led the officials to centralise the system denying any role in awarding contracts etc., to the subsidiary power companies.
And now, the HT story stands vindicated. While the UPERC has objected the UPPCL having awarded rural electrification contracts without prior clearance from it, the Comptroller and Auditor General (CAG) during an ongoing audit of the RE work, has found that rates of the tenders awarded by the power bosses for RE work were exorbitantly higher (by 20-400 per cent higher) compared to rates of the Rural Electrification and Secondary System Planning Organisation (RESPO) for 2005-06. RESPO prices are formulated taking latest market rates.
“There was a total ignorance of financial propriety in awarding the contract resulting an avoidable loss of hundreds of crores of rupees,” the CAG has observed in its preliminary report, a copy of which has already been handed over to the management. UPPCL Managing Director Avnish Awasthi when contacted feigned ignorance about the CAG audit.
It specifically mentions the case of the M/s ABB Ltd according to the report was awarded the contract for rates higher by Rs 15.74 crore.
The UPPCL awarded 12 contracts for electrification work in 15 districts between July 29, 2005 and August 25, 2005 for an aggregate value of Rs 855.45 crore.
Though the CAG observations are related to Lucknow Discom, sources said that the situation was similar in other discoms also as the tenders had been invited and awarded centrally by the Central Electricity Purchase Committee (CPEC), chaired by the CMD.
Though the jobs were of similar nature and specification, which were finalised simultaneously, the variation in item rates varied from Rs 20.64 per cent to 429.17 per cent observes the CAG in its audit report. “But no efforts were made to workout the lowest item rates which could result in saving of Rs 272.57 crore to meet out the objective of the best cost envisaged in the tri-partite agreement,” observes it.
It also observed that as per the plan, the project had to be executed within the Detailed Project Report (DPR) cost. But it rose by over 43 per cent resulting into more loan interest to the Rural Electrification Project (REC), which is giving 10 per cent of total amount as loan. The tenders (in all the discoms) were finalized at Rs 2678.81 crore against Rs 2291 crore DPR cost.
Significantly, the UPPCL has not sent the CAG a reply to the questions raised in the audit despite reminders.
On the other hand, on a complaint filed by the UP Rajya Vidyut Upbhokta Parishad president, Avadhesh Kumar Verma, the ERC also asked the UPPCL management to submit to it five year rolling investment plan for clearance. “It has come to the knowledge of the Commission that the licensee has invited tenders for investment under the rural electrification programme. No approval has been obtained from the Commission,” it said in a letter (Dated December 20, 2005) to the UPPCL. The ERC is to get a suitable reply despite reminders.
That there is something wrong in the centralized system of purchase is also proved from the fact that the present UPPCL management introduced again the decentralized system a few months ago. One wonders as to what happened to those strong arguments offered by then UPPCL Chairman, Deepak Singhal for centralising the purchase system.