NTPC paid Rs 700 crore in excess for coal imports: CAG

Firm imported over 20 MT coal via STC,MMTC from Dec '08 onwards

At a time when NTPC is pushing for the right to import coal for its power stations instead of canalising through Coal India,an audit report has said it has spent Rs 700 crore more for such imports.

In the years 2008-11,NTPC paid the importers STC and MMTC the excess bill since it did not care to check if the mineral was coming through the shortest route to the plants.

NTPC had imported over 20 million tonnes of coal through State Trading Corporation and MMTC from December 2008 onwards for its power stations. The coal landed at various ports. The agreements mandated that STC and MMTC should route the coal the cheapest cost at power stations after taking account of the technical viability of movement by the railways from ports to power stations.

The catch was that if the there was to be any change in the ports the prior permission from NTPC was necessary to make the changes.

Audit observed that a total of 11.95 MT of imported coal was supplied by STC and MMTC to various power stations of the company from the ports other than those which involved least total transportation cost ocean freight plus inland freight and excess cost on account of supplies through non-optimum routes amounted to Rs 698.81 crore and such supplies were made without any permission from the company, the CAG has written in its audit to be tabled in Parliament soon.

Instead of keeping a sharp eye on the changes if any NTPC cleared the bills from the two public sector companies even when there was a change of port. It did not insist on prior authorisation. It did not impress upon them to seek its prior permission, the auditor has argued.

NTPC has,however,contested the CAGs contention arguing that instead of just change in ports,the decision on an optimum route included several factors including railway logistical plan,port capability for handling the cargo and so on where the company had little role to play. For instance interfering with the railway plans would have amounted to a disruption in their schedule,it has argued.

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But the auditor has said the reply is not unacceptable,the company having failed to monitor and enforce the contractual provisions regarding supply of imported coal at optimum landed cost.

COSTLY ROUTE TO COAL SUPPLIES

IN THE period from 2008 to 2011,NTPC paid importers STC and MMTC the excess bill as it did not check if coal was shipped using the shortest route

THE AGREEMENTS NTPC signed with the two state-owned trading firms mandated that coal should be sent at the lowest possible cost,and ports to be changed only with prior permission

THE CAG audit has found that 11.95 MT of imported coal were shipped from ports other than those that involved the least total transportation cost