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  1. Kudankulam project: CAG picks holes in execution

Kudankulam project: CAG picks holes in execution

The report of the Comptroller and Auditor General of India on Kudankulam Nuclear Power Project, which was presented in the Parliament on Wednesday, has found a number of deficiencies in the execution and commissioning of units I and II of KKNPP.

By: | New Delhi | Published: December 28, 2017 4:09 AM
Kudankulam project, ,CAG, Kudankulam, INDIA, RUSSIA, ECONOMY The unit I and unit II of KKNPP started commercial operation after a delay of 86 months and 101 months respectively. (IE)

The report of the Comptroller and Auditor General of India on Kudankulam Nuclear Power Project (KKNPP), which was presented in the Parliament on Wednesday, has found a number of deficiencies in the execution and commissioning of units I and II of KKNPP.

CAG, in its report, has highlighted deficiencies such as avoidable payment of interest on borrowings, non-transparency in availing loans, lapses in tariff fixation process, extending undue benefits to overseas collaborating partner, non assessment of required manpower with consequent avoidable expenditure, inadequate monitoring and start of commercial operation before getting the required licence to operate from the competent authority.

The audit was conducted to assess whether Nuclear Power Corporation of India (NPCIL) exercised prudent financial management in the construction and commissioning of units I and II and implemented the project in an efficient manner.

The audit findings pointed out that the schedule date of completion was postponed from October 30, 2007 to December 31, 2011 for unit I and from October 30, 2008 to December 31, 2012 for unit II, due to delayed completion of different activities, of which many were attributable to Atomstroyexport (ASE), a company responsible for undertaking the Russian scope of work. However, there was no revision of schedule of repayment. This resulted in start of repayment of Russian credit, before revenue generation, causing an additional interest burden on NPCIL to the tune of Rs 449.92 crore.

NPCIL had to resort to external borrowings at a higher interest rate due to non-provisioning for reserve supply contracts while availing Russian credit, which was available at a cheaper rate. This resulted in additional interest cost amounting to `76.02 crore.

NPCIL availed a term loan of `1,000 crore from HDFC Bank in violation of CVC’s guidelines on tendering.

NPCIL, while fixing the tariff for power, did not consider two components: interest on foreign debt and interest on domestic borrowings, though these were actually incurred and paid. This resulted in short realisation of revenue to the tune of `90.63 crore during pre-commercialisation period.

Unit I of KKNPP was shut down from June 24, 2015 to January 31, 2016 for 222 days as against the planned period of 60 days. This was due to decision of NPCIL to shut down the plant and execute the refuelling work on its own without evaluating its technical competency. The extended shutdown resulted in revenue loss of Rs 947.99 crore to NPCIL, the CAG report pointed out.

The unit I and unit II of KKNPP started commercial operation after a delay of 86 months and 101 months respectively. The delays were primarily due to shifting of work from Russian scope to Indian scope, in execution of work and in submission of working documents/supply of equipment/materials by ASE, delays due to design changes and additional works.

The delay in completion also resulted in cost overruns. NPCIL did not initiate any claim for recovery of additional expenses of `264.79 crore which were caused due to delayed completion of works by ASE.

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  1. Arvind Baba
    Dec 28, 2017 at 8:03 pm
    Kudankulam is a small rural area, largely inhabited by fishermen and most of them belonging to the Christian community. Noam Chomsky, a famous American communications theorist, calls nuclear power a “very dangerous initiative, particularly in countries like India, which has had more than its share of industrial disasters, Bhopal being the most famous”. The project was built despite the opposition from locals, professors and scientists where NPCIL was of the view that it’s the answer to Tamil Nadu’s energy shortages, but the reality is that Tamil Nadu is still short of electricity and the reactor is has experienced episodes of starting and shutting down again and again.
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