TN: TANGEDCO Violates Tender Rules, Urgency in Floating Tenders Raises Suspicions

The government of Tamil Nadu has suffered yet another embarrassment after its much-celebrated e-tender process hit a legal hurdle. The Tamil Nadu Generation and Distribution Corporation (TANGEDCO) has been held accountable for rules, including a mandatory time of 30 days for submitting tenders.

The Madras High Court put off the opening of the e-tender for procuring 20 lakh tonnes of imported steam coal worth Rs 1,330 crores. The conditions laid down in the e-tender reportedly eliminated domestic suppliers from competing for it. The Arappor Iyakkam (API), a people’s movement, flagged the tender for violation of norms. It was followed by an intervention by the court which came about due to a writ petition filed by an organisation.

The API also raised suspicions over the urgency shown by the corporation in procuring coal for thermal stations to be delivered at the Kamarajar Port in Ennore between May 2021 and May 2022.

COURT STAYS PROCEEDINGS

After hearing the writ petition the court denied permission to TANGEDCO to open the tender on the scheduled date of February 23. The tender was published on February 8, leaving just 16 days for the bidders to participate.

The interim order directed the corporation to issue a corrigendum to extend the last date of submitting tenders by 15 days. The corporation has now extended the last date for submitting the tender till March 10.

Jayaram Venkatesan of the Arappor Iyakkam said, “The order was passed based on the Rule 20 of the Tamil Nadu Transparency in Tenders Act requiring a minimum of 30 days time to be given for submission of bids for tenders valued over Rs two crore.”

The organisation also alleged that the tender did not have the approval from the TANGEDCO board but was ratified after the advertisement was published. The government has been accused of fixing tenders in the highways department. The Chennai corporation was also alleged to have indulged in floating tenders after work was completed.

URGENCY IN FLOATING TENDERS?

Another point of dispute was the urgency in floating the tender for procurement of coal required from May this year. TANGEDCO contended that the implementation of the Model Code of Conduct could delay the procurement process but the API questioned the “unusually fast” processing.

“The requirement was from May 2021 to May 2022; even if the code of conduct is a threat the government could have called for responses for two months now. The recent increase in the coal price, which has almost doubled in the international market, could end up increasing the production cost, which could be passed on to the consumers,” Jayaram added.

CLAUSES INTRODUCED TO REJECT LOCAL BIDDERS

The tender incorporated two new clauses, mandating the possession of an original export license and direct delivery to TANGEDCO. The two conditions could effectively keep away domestic players and favour only international companies in the sector.

“The incorporation of the two clauses will effectively eliminate the domestic suppliers as they may not possess the license and have the logistics to deliver directly to TANGEDCO. The conditions are contrary to the general financial rules and the Make in India, 2017 order on public procurement”, alleged Jayaram.

The tender was not published in the Indian Trade Journal, a mandatory procedure for tenders worth more than Rs 75 crores, alleged API. The violation of pre-existing rules have become routine in the present AIADMK regime, opposition parties have alleged frequently.

CORRUPTION LEADING TO LOSS IN TANGEDCO

The “corrupt practices” in TANGEDCO are driving the corporation deep into losses, the API alleged. The organisation claimed that the government lost around Rs 6,600 crores due to faulty coal import practices between 2012 and 2016. The corporation reportedly purchased coal at an inflated price leading to the loss.

The loss of TANGEDCO was estimated at Rs 12,623 crores for 2018-19. The lockdown due to the COVID-19 pandemic has also played a role in escalating the loss of the corporation by Rs 1,260 crores during April 2020.

The government’s lack of transparency in executing tenders and projects along with privatisation of several works in the corporation has undermined the effectiveness of the department.