CAG Report: Electricity companies bought transformers by following rules, action recommended

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Electricity companies have done a lot of arbitrariness in the purchase of transformers. Transformers were bought keeping the rules in mind. Ignoring the requirement of registration with the Bureau of Indian Standards (BIS), contracts were entered into to purchase transformers with firms that had only submitted applications for the same. This has been disclosed in the report of the Comptroller and Auditor General of India (CAG) placed in both the houses of the Legislature. The report also recommended action against the officers responsible for this.

The CAG assessed the procurement, quality assurance system and repair of distribution transformers in Madhyaanchal, Purvanchal, Dakshinanchal and Paschimanchal Vidyut Vitran Nigam during 2016-17 to 2018-19. During this period, power companies finalized 146 tenders for purchase of 3,01,336 distribution transformers worth Rs 2,489.71 crore and Rs 290.23 crore for repairs. Of these, CAG reviewed 33 per cent tenders for purchase of 1,67,379 transformers and 45 per cent tenders for repairs worth Rs 147.73 crore.

According to the CAG report, many irregularities were revealed in the review of tenders. In which it is important to enter into contracts with firms not fulfilling the pre-qualification conditions and not providing type test reports. In particular, questions have been raised on the contract of transformer supply with the firms despite not having BIS certificate. The officials also awarded the contract for supply of transformers worth crores of rupees to the ineligible firms preferred. In some cases, it has also come to the fore that tenders were opened first and BIS certificate was given later. Not only this, due to failure to implement the price fall back clause, the power companies had to incur an additional expenditure of Rs 1.37 crore.

According to the report, necessary quality testing of 1,26,205 transformers worth Rs 802.92 crore was not done. Audit also revealed that undue advantage was extended to a firm based in Meerut in the purchase of transformers despite the sample failing in the quality test. The CAG has also revealed all the irregularities in the repair of transformers. For example, the number of damaged transformers was much more than the norm and the return of burnt transformer oil and aluminum and copper were also less than the prescribed standards.

Dakshinachal Vidyut Nigam gave undue advantage to Torrent Power
In the CAG report, Torrent Power Ltd., a private company handling electricity supply in Agra by Dakshinanchal Vidyut Vitran Nigam. It has also been revealed to have given undue advantage to. It said that Dakshinanchal Nigam has short recovered regulatory surcharge of Rs 79.90 crore from Torrent Power and also suffered loss of interest of Rs 29.97 crore on the short recovered amount. The report revealed that failure to determine the correct price differential for the extended supply period of distribution transformers in Dakshinachal resulted in overpayment of Rs 2.03 crore to the suppliers. The CAG has also put the Dakshinachal Vitran Nigam in the dock for the purchase of sheet molding compounding (SMC) boxes in excess of the requirement, saying that unreasonable purchases of Rs 7.86 crore were made. Also, there was a loss of interest of Rs 2.12 crore.

Unreasonable purchase of goods in Madhyanchal
According to the CAG report, Madhyanchal Vidyut Vitran Nigam made unreasonable purchases of transformer protection boxes worth Rs 7.25 crore, which remained unutilized for more than four years. The CAG has also questioned the loss of interest payment of Rs 6.41 crore on account of incorrect estimation of taxable profit by the State Electricity Generation Corporation.

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Electricity companies have done a lot of arbitrariness in the purchase of transformers. Transformers were bought keeping the rules in mind. Ignoring the requirement of registration with the Bureau of Indian Standards (BIS), contracts were entered into to purchase transformers with firms that had only submitted applications for the same. This has been disclosed in the report of the Comptroller and Auditor General of India (CAG) placed in both the houses of the Legislature. The report also recommended action against the officers responsible for this.

The CAG assessed the procurement, quality assurance system and repair of distribution transformers in Madhyaanchal, Purvanchal, Dakshinanchal and Paschimanchal Vidyut Vitran Nigam during 2016-17 to 2018-19. During this period, power companies finalized 146 tenders for purchase of 3,01,336 distribution transformers worth Rs 2,489.71 crore and Rs 290.23 crore for repairs. Of these, CAG reviewed 33 per cent tenders for purchase of 1,67,379 transformers and 45 per cent tenders for repairs worth Rs 147.73 crore.

According to the CAG report, many irregularities were revealed in the review of tenders. In which it is important to enter into contracts with firms not fulfilling the pre-qualification conditions and not providing type test reports. In particular, questions have been raised on the contract of transformer supply with the firms despite not having BIS certificate. The officials also awarded the contract for supply of transformers worth crores of rupees to the ineligible firms preferred. In some cases, it has also come to the fore that tenders were opened first and BIS certificate was given later. Not only this, due to failure to implement the price fall back clause, the power companies had to incur an additional expenditure of Rs 1.37 crore.

According to the report, necessary quality testing of 1,26,205 transformers worth Rs 802.92 crore was not done. Audit also revealed that undue advantage was extended to a firm based in Meerut in the purchase of transformers despite the sample failing in the quality test. The CAG has also revealed all the irregularities in the repair of transformers. For example, the number of damaged transformers was much more than the norm and the return of burnt transformer oil and aluminum and copper were also less than the prescribed standards.

Dakshinachal Vidyut Nigam gave undue advantage to Torrent Power

In the CAG report, Torrent Power Ltd., a private company handling electricity supply in Agra by Dakshinanchal Vidyut Vitran Nigam. It has also been revealed to have given undue advantage to. It said that Dakshinanchal Nigam has short recovered regulatory surcharge of Rs 79.90 crore from Torrent Power and also suffered loss of interest of Rs 29.97 crore on the short recovered amount. The report revealed that failure to determine the correct price differential for the extended supply period of distribution transformers in Dakshinachal resulted in overpayment of Rs 2.03 crore to the suppliers. The CAG has also put the Dakshinachal Vitran Nigam in the dock for the purchase of sheet molding compounding (SMC) boxes in excess of the requirement, saying that unreasonable purchases of Rs 7.86 crore were made. Also, there was a loss of interest of Rs 2.12 crore.

Unreasonable purchase of goods in Madhyanchal

According to the CAG report, Madhyanchal Vidyut Vitran Nigam made unreasonable purchases of transformer protection boxes worth Rs 7.25 crore, which remained unutilized for more than four years. The CAG has also questioned the loss of interest payment of Rs 6.41 crore on account of incorrect estimation of taxable profit by the State Electricity Generation Corporation.

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