Transformer procurement scam | Plea in Madras HC to register case against ex-Minister Senthilbalaji

Arappor Iyakkam seeks High Court direction for DVAC to investigate ₹397 crore scam in transformer procurement.

The anti-corruption organisation, Arappor Iyakkam, has approached the Madras High Court seeking a direction to the Directorate of Vigilance and Anti Corruption (DVAC) to register a case regarding an alleged scam in the procurement of distribution transformers during the tenure of former Electricity Minister V. Senthilbalaji between 2021 and 2023.

The petitioner organisation has also insisted upon a High Court-monitored probe by a Special Investigation Team (SIT), since materials collected by it had reportedly revealed a loss to the tune of ₹397 crore to the public exchequer due to collusive bidding for supply of the transformers to the Tamil Nadu Generation and Distribution Corporation (Tangedco).

Filing an affidavit on behalf of the organisation, its managing trustee Jayaram Venkatesan told the court that distribution transformers were used to step down the voltage used in distribution lines to a level that is usable by the end consumer. Tangedco procures these transformers in various capacities, ranging from 25 KVA to 500 KVA, depending on the load capacity requirements.

The procurement takes place by inviting tenders through tntenders.gov.in. Hence, the petitioner analysed 10 tenders floated between 2021 and 2023 for procurement of 45,800 distribution transformers. The total value of these tenders floated by Tangedco amounted to ₹1,182.88 crore.

The tenders were examined by Arappor Iyakkam from the viewpoint of the number of participating bidders, the value quoted by each bidder, the prevailing market rate, and other parameters to find out if there were any irregularities. The elaborate exercise led to the finding that in seven of the 10 tenders there was clear evidence of unjust enrichment to the contractors through collusive bidding and cartelisation, and the resultant loss to the public exchequer was found to be ₹397 crore, Arappor Iyakkam said.

“It is interesting to note that in each of the 10 tenders, more than 26 bidders were shown to have participated, thereby creating an apparent image of healthy competition, but what is to be noted is that in all tenders, almost all bidders had quoted exactly the same price corrected to the same decimal points,” the affidavit read.

It went on to state: “It is mathematically near to a zero probability for more than 20 bidders to have quoted the exact same rate in tenders. The only logical and plausible conclusion that follows from this fact is that these bidders have conspired and colluded amongst themselves to prefix the rate and had thus snuffed out the competition and made a mockery of the tender process.”