Puducherry lost chance to get power at reasonable cost: CAG

The CAG has rapped the Puducherry government and PIPDIC, a government undertaking, for losing an opportunity to get power at a reasonable cost.

Last Updated: Jul 30, 2013, 13:09 PM IST

Puducherry: The CAG has rapped the Puducherry government and PIPDIC, a government undertaking, for losing an opportunity to get power at a reasonable cost due to hasty and irregular selection of a private partner and a "lackadaisical" approach in execution of Naini coal block project in Odisha.

The Comptroller and Auditor General report said the decision to nominate JR Power Gen Private Limited, a private party with no proven experience in coal mining or power generation was against the canons of financial propriety and Apex Court`s Dec 2006 judgement, which held public contracts should be procured only through tenders.

It was also in total violation of the Central Vigilance Commission`s Oct 2003 guidelines, which emphasised the need to award contracts in a transparent manner.

The CAG report for the year ending Mar 31, 2012 was tabled in the Assembly yesterday by Chief Minister N Rangasamy.

The report said PIPDIC had nominated JRP as Joint Venture partner without following the tender process.Failure to adhere to milestones led to cancellation of the allotted coal block, resulting in non-accrual of envisaged benefit of availability of cheaper power.

It found PIPDIC had no intention to apply for allotment of coal blocks prior to suo motu proposal received from JRP.

Its application for allotment of coal block was only at the behest of JRP as seen by the fact that the Union Territory was not even aware of the coal ministry`s circular informing them of allocation under government dispensation route.

When JRP approached the Union territory in Dec 2006 it was not even incorporated as a company. It was incorporated as a private company only on January 12, 2006, it said.

PIPDIC received Expressions of Interest between June 2007 and March 2008 from experienced mining companies like Neyveli Lignite Corporation, LANCO Group and IL&FS. But these offers were either not considered or followed up on the ground that PIPDIC had already tied up with JRP through a binding MOU.

It said the terms of MOU and Coal Supply agreement were heavily loaded in favour of JRP and that PIPDIC entered into MOU and CAS accepting JRP`s terms without due diligence on the commercial terms involved.

The Inter Ministerial Group reviewed progress of development of allocation of the coal block and noted "unsatisfactory progress" and recommended de-allocation, which was accepted by the centre.

PTI