Chennai, Jan 25: Arappor Iyakkam, an anti-corruption NGO, alleged that there is a difference of 25% between the market price and the purchase cost of coal imported between 2012 and 2016 in Tamil Nadu, and claimed that there has been a huge over-invoicing scam worth Rs.3000 crore.
Arappor Iyakkam, presented the copies of tenders and purchase orders of the coal imported from Indonesia between 2012 and 2016, obtained through RTI filings, at a press conference here.
The purchased coal was priced based on Gross Calorific Value measured on ‘air-dried basis’, a higher grade of coal which has a higher Gross Calorific Value (GCV). However, the Indonesian coal index which was considered one of the indices considered for payment, reported GCV measured on ‘As Received Basis’. The Gross Calorific Values calculated on the basis of these two parameters were seen to be considerably different.
According to Jayaram Venkatesan, convener of Arappor Iyakkam, who was addressing the media at the Chennai Press Club, “This technical aspect has been the primary modus operandi for this scam. The Gross Calorific Value of coal required for the imported coal was 6300 Kcal/kg on ‘Air-Dried Basis’. This GCV is equivalent to 5800 Kcal/kg in ‘As Received Basis’ which is recorded by the Indonesian government.”
The difference in the market price of Indonesian coal between 6000 Kcal/Kg and 5800 Kcal/Kg is almost $8 to $10 per metric ton, according to the NGO. When freight charges are also calculated, for 2.44 Crore metric ton which was imported by Tamil Nadu, the loss to the government can be anywhere between Rs. 1730 Crores and Rs.3025 crore.
“TANGEDCO has made a loss of almost Rs.3000 crore in the last 5 years and a major beneficiary of this scam is Adani Global Private Ltd which secured 49% of the total tender. Out of 2.44 Crore metric tonnes purchased by TANGEDCO, they have got the order for 1.46 Crores,” continued Jayaram.
“All these scams will affect the common man. There is a proposal now to increase the electricity tariff. But, why should it be increased? Most of the losses that we face today within the electricity department is primarily because of the scams that has happened in import of coal and in the power purchase agreements,” said Jayaram.
Arappor Iyakkam further demanded the setting up of a Special Investigation Team (SIT) that would specifically look into this matter. “CBI, after sitting on the evidence for the past 2 years, has now hurriedly filed an FIR on January 22 blaming only a few stakeholders like CEPL, MMTC and Aravalli Power Corporation. But a lot more people are involved in this scam,” said Jayaram. Arappor Iyakkam also mentioned that the CBI FIR is only related to the issue of faking lower grade coal as higher grade and not on the exposed frauds.
The group also targeted Natham Vishwanathan, the former Electricity minister from AIADMK, and former TANGEDCO Chairman and Managing Director, Gnanadesikan IAS for conspiring into bringing losses for TANGEDCO for their own personal benefits. “IT raids at Natham Vishwanathan’s place have unearthed evidences of foreign exchange, ‘benami’ and ‘hawala’ transactions. It is also believed that part of the proceeds has also been invested as black money in NPR group of institutions owned by his friend and managed by his brother,” speculated Jayaram.
Further, Arappor Iyakkam declared that the evidences will be submitted at the Delhi High Court through Prashant Bhushan, a veteran lawyer and activist, who has already filed a case seeking a SIT to look into the over-invoicing scam.
The modus operandi
An article in the Economic and Political Weekly dated April 2, 2016, explains the modus operandi in the scam. A company called MBG Commodities Pvt. Ltd. responded to the tenders floated by TANGEDCO. Two trading companies namely Glints Global General Trading LLC, Dubai and Glints
Glints Global got the coal from a company called “B” based in Singapore, which owns a mine in Indonesia. So how are the dots connected? Company B sells coal at, say, $45 a tonne to Glintz Global. With absolutely no value addition (because coal is being shipped directly), Glintz Global gets an invoice for $85 per tonne, which is the rate at which it is purchased by MBG Commodities which then sells the coal to TNEB at a slightly higher rate of $87 per tonne.
Now, TNEB pays $87 per tonne to MBG Commodities which pays $85 to Glintz Global which, in turn, pays $45 per tonne to Company B and retains the rest of the amount. The silent partner in Dubai is happy with a paltry commission and is an invisible non-entity.lobal Limited, Hong Kong (GGL), supplied coal to MBG Commodities Pvt. Ltd.