NPCIL spent Rs 706 crore more on KNPP component, CAG finds

The Nuclear Power Corporation of India Ltd., which had agreed to build a major component of the Russian-make Kudankulam Nuclear Power Plant on its own to save cost, ended up spending Rs 706 crore more, a CAG report has said.
The Comptroller and Auditor General report on KNPP units 1 and 2 was tabled in the Lok Sabha today.
According to the report, the cost of Russian scope in building the plant was nearly USD 1,600 million during initial negotiations between the NPCIL and Russia's Atomstroyexport.
The Russian side made an offer that the cost may decrease if the NPCIL takes up the work of erection and commissioning of Nuclear Steam Supply System (NSSS) and Turbo Generator (TG).

The NSSS and TG form the core of a nuclear power plant.
During the final round of negotiations in August 2001, the offer was accepted by NPCIL and the cost of Russian scope was reduced to a fixed price of USD 1,535 million (Rs 7,217 crore).

This was to reduce the cost by USD 65 million (Rs 305.50 crore) by cutting down the number of Russian personnel at the project's site in Tamil Nadu.
A CAG audit found that NPCIL incurred expenditure of Rs 1,012.37 crore towards erection and commissioning of NSSS and TG, as against the Rs 305.50 crore previously estimated.

"Thus, the NPCIL incurred an extra amount of Rs 706.87 crore as it did not conduct a cost-benefit analysis before agreeing to the shifting of scope," the report said.
In its reply to the CAG, NPCIL on June 28 this year said the erection and commissioning of NSSS and TG was shifted to the Indian side in order to learn the technology, which is "generally not parted by foreign vendors", and thus "cannot be quantified in monetary terms".
The unit 1 of the KKNPP started commercial operations in December 2014 and unit 2 in March this year. They were built at a cost of Rs 22,462 core.

Both units have a capacity to generate 1000 MW each.