DMK-Govt Accused of Double Standard on Coal Scam and Hindenburg Paper

The Dravida Munnetra Kazhagam (DMK) assured to investigate the previous regime’s financial scams in its election manifesto. After forming the government in 2021 they are maintaining “stark silence,” accused Chennai-based anti-corruption NGO Arappor Iyakkam.

In 2018 the NGO reported a coal import scam to the tune of Rs 6,066 crore in Tamil Nadu’s electricity board TANGEDCO (Tamil Nadu Generation & Distribution Corporation). NewsClick interviewed Jayaram Venkatesh, convenor of Arappor Iyakkam about the same. 

Venkatesh alleged that even the Stalin-led DMK government is not taking any action on it even after submitting a letter to the Chief Minister. While in the opposition then, DMK leader M K Stalin demanded a CBI probe into the coal import scam.

“Now he has the power to order an investigation, but he has not done it,” said Jayaram Venkatesh.

“But they are demanding the union government for a joint parliamentary committee to probe the Hindenburg papers” he added.

The recently released Hindenburg research report on the Adani Group mentions Tamil Nadu Electricity Board along with other importers. It carries the Directorate of Revenue Intelligence’s (DRI) investigation finding of huge over-valuation of coal by the Adani group, to the extent of about 50% to 100%.

“There is a senior-level bureaucratic lobby preventing the investigation,” said Venkatesh.

FAVOURITISM & HEAVY LOSS

The Arappor Iyakkam accused TANGEDCO of favouritism and collusion with select private players.

“For a tender with a value of Rs 100 to 150 crores, they asked for turnover conditions of almost Rs 1,000 crores. This ensured that a lot of medium-level players were ruled out of the competition. Only selected bunch like Adani, Chettinad Logistics, Knowledge Systems, and MSTC companies were able to participate,” said Venkatesh.

Between 2012 and 2016 TANGEDCO imported 2.44 crore metric tonnes of coal, and close to 50% tender was given to the Adani group.

(From the Hindenburg report)

Arappor findings state that TANGEDCO purchased over-valued and substandard coal between 2012 and 2018.

“Tamil Nadu Newsprint and Papers Limited (TNNPL) also purchased similar quality coal, but for USD 20 less per metric tonne than TANGEDCO at the same time period,” said Venkatesh.

“TANGEDCO knows that the Indonesian government releases the market price for coal every month. They could have compared it with the quotation these companies gave” he said.

“TANGEDCO’s quality certificate seems to have been faked. CAG (Comptroller and Auditor General) calculated a loss of Rs 800 crore on one-third of the consignments checked randomly. If you calculate for the entire consignments it was close to Rs 2,400 crore,” he added.

Putting together the pricing loss and the quality loss, Arappor Iyakkam calculated a total loss of Rs 6,066 crore in TANGEDCO’s coal imports within five years.

BURDEN ON THE PUBLIC

Jayaram Venkatesh said that the coal import scam is not restricted to Tamil Nadu, but the same modus operandi is followed across the country.

“The DLRI estimated, with pricing alone, a loss of Rs 29,000 crore. If we include the quality of coal purchased, I think this should be somewhere around Rs 50,000 crores across the country” he said.

Due to such scams, electricity boards are running at loss.

“The TNEB is suffering a heavy loss of Rs 1.5 lakh crores. Recently it increased the tariff and placed these losses on the public” said Venkatesh.

“The money from electricity boards is illegally taken by these private companies. Imagine what will happen if these private companies take over and supply electricity, tariffs will keep increasing” he said.

He said that between 2012 and 2016 the price of coal fell and the cost of power became cheaper, while the demand had not increased. “This was a wonderful opportunity for the electricity boards to recover from the loss. Unfortunately, the reverse happened” he said. 

“Some of these players are still participating in the tenders of TNEB, like Adani. They have signed MoUs on other projects” he said. So, the present government “doesn’t want to actually take action on Adani and other people” he added.

Tamil Nadu electricity minister Senthil Balaji, in August 2021, claimed that about 2.38 lakh tonnes of coal was missing from our power plants and promised a detailed probe into it. But, there has been no talk about it since.