'DNA' investigation: MSEDCL pays inflated bill for maintenance contract

Failing to invite tenders and favouring a single firm for a large chunk of annual contracts has led to losses worth crores of rupees for the Maharashtra State Electricity Distribution Company Limited (MSEDCL). The state-run power distribution company could have saved a minimum of Rs5 crore only in the annual maintenance contracts for line printers over the past eight years.

Instead, the company has given annual contracts for maintaining about 450 printers to a single IT company, Peripheral Services, for the past several years. DNA has hundreds of order copies of annual maintenance contracts issued by MSEDCL to Pune-based Peripheral Services for districts across the state. In some cases the company has paid five times the rate offered by other IT companies.

MSEDCL has about 700 information technology subdivisions and 34 district IT centres. Every subdivision has a T-5000 or T-6050 printer installed. Similarly, every district IT centre has an average of three printers, usually a combination of the high-end MT-661, M-691 and P7-1500. Each subdivision and district IT centre issues contracts for preventive and corrective maintenance of the printers and their parts.

Each year for at least the past eight years, contracts to maintain an average of 450 such printers have been given to Peripheral Services. For each printer, the firm has charged the state-run electricity distribution company Rs 15,000 to Rs 20,000 more than the average cost of annual contracts offered by other IT firms.

At Rs15,000 in excess of the prevailing market average, MSEDCL has lost about Rs67.5 lakh each year, or Rs5.4 crore over eight years. In fact, documents show that Peripheral Services received contracts from MSEDCL since as far back as 2001.

Worse, MSEDCL has also given contracts by calling for quotations from select firms instead of an open tender system, apparently to favour Peripheral Services, a company promoted by Pune-resident Manoj Kale and his wife. In fact, a letter from the chief general manager (CGM) to deputy general managers (IT) of 24 districts dated June 2006, said, “In future, it is requested that AMC for LIPI line matrix printers should be placed through open tendering system only and not on quotation basis.”

Despite the GM’s letter, officials continued to seek quotations for contracts. Other IT contracts have had a similar fate. Some supply orders for photo bill printing on A-4 size paper, supply of data cartridges etc accessed by DNA show that these too have been given on single quotation basis to Peripheral Services.

Manoj Kale of Peripheral Services says rates are cut to face competition and retain customers. He did, however, accept that his firm’s rates are steeper than those of other companies. “Work done by other companies is sub-standard,” he claimed, denying any wrongdoing.

Ram Dotonde, chief general manager (corporate communications) of MSCDCL insisted that the rates obtained through tendering and the rates quoted Peripheral Services are “comparable”. According to information from MSEDCL, of its 34 IT centres, 18 annual contracts are held by Peripheral Services. Of these 18, contracts for line printers’ maintenance were awarded at through a tendering process at five places, the rest through quotations. “It has been instructed now to all offices concerned to strictly follow tender process for awarding such type of AMCs in future,” said Dotonde.