Sources in PSEB say that the Board placed an order for the supply of four 100 MVA transformers on EMCO in September 1996, overlooking the fact that this firm had poor performance in the execution of trial order of 1994 since the first unit had failed during testing carried out from January to June 1996.

The sources said the first of the two transformers ordered in by the board in 1994 was commissioned at Barnala sub-station in late 1996 and it had developed serious defects in November 1997. It had to be sent back to Mumbai for repairs after giving only one year service as against the normal span of 30 years for this equipment.

They said that the second of the two transformers ordered in 1994 also could not pass the pre-despatch testing and inspection, yet it was cleared for despatch. This transformer was received at Dhandari in early 1997. In 1998, after the failure of the first EMCO transformer at Barnala, the second EMCO transformer was rushed to Barnala and commissioned there in mid-1998. Within six months, this transformer developed serious internal fault leading to failure and tripping in the last week of the September.

These sources said that in February 1996 fresh tenders for the supply of nine 100 MVA transformers was opened and put up to the board in its meeting held on August 16, 1996. Since BHEL bids were the lowest, the board placed an order for 10 transformers on BHEL. However, the letter of intent was not issued to BHEL after this.

In the meantime, EMCO represented to the board that in view of the declining prices their offer would be the lowest since it was on variable price basis. The board decision was kept in abeyance and a fresh memorandum was put up to the board in its meeting held on September 20, 1996. In this meeting the board reduced the order on BHEL from 10 to four and gave the order for four transformers to EMCO and three to Crompton.

Sources add that the PSEB management later decided to do away with the price variation clause. Thus, the very basis of reopening the decided order, viz price variation, was done away with causing a direct gain to the manufacturer.

Padamjit Singh, president of the PSEB Engineers' Association, said that the Association had been warning the board and the government authorities since December 1997 against the poor quality of 100 MVA EMCO transformers but the matter was hushed up and no independent inquiry was ordered either by the board or the government.

He said that the decision of the board to accept two more 100 KVA transformers from EMCO in 1998 in spite of the failure in pre-despatch testing clearly indicates a high-level conspiracy which could be exposed only by a CBI inquiry. The plunder of public money had to be stopped since two more 100 MVA transformers were yet to be supplied, he said.

Meanwhile, K.S. Dhillon, member (Transmission) of the PSEB, when asked for his comments said that there was nothing wrong in the deal. He said that the failure of the transformers supplied by EMCO was no reason to cancel the other orders placed on the firm as transformers supplied even by other well reputed firms including BHEL and Crompton had failed at various places.However, he admitted that the board had made its specifications for the supply of transformers very stringent and EMCO does not figure in the list of firms which have got orders for the supply of 20 transformers recently placed by the board.

Dhillon said that EMCO had arranged for the repair of the transformers which had developed problems as these were covered under the warranty. He asserted that it was a clean deal and there were no kickbacks at any level.