Wednesday, April 06, 2016

Rs 29,000 crore scam? Forty top Indian companies being "investigated" for over-invoicing imported coal

By Our Representative
 A top Indian online site analysing global metals and energy indices has created a major flutter by revealing that 40 well-known Indian energy companies are being investigated by a Union Finance Ministry wing for "over-invoicing of imported coal", leading to "artificially higher prices being "passed on to electricity consumers across the country."
The site claims, "The scam is conservatively estimated by government officials at no less than Rs 29,000 crore, a third of which is in the form of higher power tariffs." Among the "big names from the corporate sector" it names the Adani Group and the Anil Dhirubhai Ambani Group (ADAG), both known to be close to Prime Minister Narendra Modi.
The site reports, "On the last day of March, the Directorate of Revenue Intelligence (DRI), which comes under the Union Ministry of Finance, issued a 'general alert' to 50-odd customs establishments all over India highlighting the modus operandi of over-invoicing of imports of coal from Indonesia."
The site says, the Adani Group's companies being investigated Adani Enterprises Ltd, Adani Power Ltd, Adani Power Rajasthan Ltd, Adani Power Maharashtra Ltd, Adani Wilmar Ltd and Vyom Trade Link.
"The group has supplied coal to various power generation and distribution companies, including Tamil Nadu Electricity Board, Gujarat State Electricity Corporation, Haryana Power Generation Corporation and Jhajjar Power Ltd", it adds.
Other names the sites reveals include two companies of the Essar Group; JSW Steel Ltd headed by Sajjan Jindal; four companies in the Hyderabad-based NSL group promoted by M Venkataramaiah and M Prabhakar Rao; India Cements Ltd led by former International Cricket Council chairman N Srinivasan; and Uttam Galwa Steels Ltd led by Rajinder Miglani.
"The list", says the site, "also includes Gupta Coal India Ltd; MBG Commodities Pvt Ltd; Knowledge Infrastructure Systems Pvt Ltd; three companies in the Bhatia group; two companies in the Gandhar group; Coastal Energy Ltd; Aggarwal Coal Ltd; Suryadev Alloys and Power Pvt Ltd; Laxmi Organic Industries Ltd; Phoenix Comtrade Pvt Ltd; and Simhapuri Energy Ltd."
The site further says that it is not just the private ssector companies but also government-owned companies which are being investigated. These include "the country’s largest power producer NTPC Ltd (formerly National Thermal Power Corporation Limited), MMTC Ltd (formerly Metals and Minerals Trading Corporation Limited), MSTC Ltd (formerly Metal Scrap Trading Corporation Limited) and Karnataka Power Corporation Limited."
"Due to over-invoicing, an ordinary consumer of electricity may be ending up paying around Rs 1.50 per unit or kilowatt hour (kwh) extra", the site estimates, adding, "So if a household consumes, say, 1,000 units and pays, say, Rs 3 per unit, the household would be paying an extra Rs 1,500 per month on the electricity bill or twice the amount that should have been actually charged had imported coal not been over-invoiced."
"The uncertainty in domestic coal production and the periodic bans on coal mining due to judicial pronouncements have compelled power generators to rely more on imported coal", it points out.
Revealing that the calorific value of Indonesian coal is between 3,800 and 4,200, the site says, "The freight on board (FOB) prices of these qualities of coal in Indonesia in 2014 varied between $30 and $37 per tonne. The freight charges during this period for deliveries on the west and east coast of India ranged between $10 and $12 per tonne."
"Thus", it says, "The CIF prices should have been in the range $ 40–50 per tonne against the actual average import prices of over $ 82 per tonne, the DRI has claimed."
“Interestingly", the site recalls, "In 2014, two major power producers, Tata Power and Adani group companies, which supply power to more than one state electricity board and which have independent power purchase agreements with distribution companies, were allowed to recover compensatory tariffs from five state distribution companies."
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Click HERE to read full report

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