Delayed renovation of plants cost NTPC Rs 1,911 cr: CAG

NTPC Ltd has taken a hit of Rs 1,911.16 crore on account of delays in implementing renovation and modernisation of its power plants, government auditor CAG said today.
NTPC lost the amount due to reduced tariff recovery, outages, avoidable expenditure, generation loss and excess coal consumption for delay in implementation of its Renovation and Modernisation (R&M) policy, said the Comptroller and Auditor General of India (CAG) report for the year ended March, 2015, tabled in Parliament today.
"There was a total delay of three to 109 months in completing activities relating to R&M works in 19 out of 20 schemes selected for audit in nine power stations. Out of 335 contract packages, only 197 were awarded, 107 of these packages were completed of which 41 were delayed," CAG said.

This led to reduced tariff recovery of Rs 199.65 crore in four power stations and refund of tariff with interest of Rs 23.42 crore, it said.
It added: "Avoidable or extra expenditure of Rs 47.13 crore, generation loss of Rs 269.78 crore due to defective systems, excess coal consumption of Rs 881.89 crore due to poor thermal efficiency, generation loss of Rs 489.29 crore on account of forced outages and non-adherence to environment norms due to non-completion of project in time even after their initiation were also noticed."
CAG has suggested timely submission of comprehensive R&M proposals at the initiation stage itself so that the time involved in re-submission of proposal and consequent delays could be avoided. To minimise forced outages and excess coal consumption, it suggested a review of the R&M activities,

It further asked NTPC to ensure that the amount claimed as R&M expenditure in tariff petitions is utilised within the tariff period to avoid refund or deferral of allowance by the Central Electricity Regulatory Commission (CERC).

On Rural Electrification Corp (REC), CAG said that its decision to sanction and disburse a loan disregarding the risk associated with financially weak promoters, after relaxing pre-disbursement conditions, resulted in risky exposure of Rs 250 crore.
In September 2005, REC sanctioned a loan of Rs 250 crore to M/s Shree Maheshwar Hydel Power Corp Ltd to set up a hydro power project in Madhya Pradesh. The loan was classified as non-performing asset in June 2011 and categorised as doubtful in January 2013.

About the Power Finance Corp, CAG said the decision to relax pre-disbursement conditions, disregarding the provision of common loan agreement and regularising payment of interest by way of IDC (interest during construction) funding against the backdrop of uncertainties surrounding a project, led to risky loan exposure of Rs 239.36 crore and consequent sub-standard asset.