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VOICE OF
ELECTRICITY WORKERS
CAG questions transparency in power
reforms
The Comptroller and
Auditor General (CAG) of India has raised "serious objections" to the system
adopted by the Delhi Government for the privatisation of the power distribution
system in the Capital in June 2002. The Sheila Dikshit Government, on the other
hand, defended the decisions taken by it in the run up to the privatisation
process in larger interest of the people arguing it had the choice of making
these changes or aborting the power reforms process.
In its annual
report for the year 2002-03, which was tabled in the Delhi Assembly today, the
CAG raised questions on transparency in power reforms and said "substantial
modifications" in the transfer scheme, while "benefiting" the privately managed
discoms, put "additional financial burden" on the Delhi Government and the
State-owned Delhi Transco.
Pulling up the
Government for making significant changes in the transfer scheme without
approval of the competent authority, (Lieutenant-Governor), the CAG asked the
Delhi Government to obtain post-facto approval to the modifications. The Delhi
Government in its defence argued that such matters did not require the approval
of the Delhi Lieutenant-Governor as had been advised by its Law Department in
another matter.
Commenting on the
impact the modification would have, CAG said the enhancement of moratorium
period from three to five years would only result in depriving the Holding
Company of interest amounting to Rs. 339.84 crores which would have accrued
after the third year. Moreover, it enables utilisation of the loan amount of Rs.
1,416 crore for two additional years without interest.
The CAG observed
that the requirements and scope of work were not defined prior to the selection
and appointment of the consultants. "Hence, all offers could not be evaluated on
a transparent basis," it said. The Delhi Government, however, argued there was
no rule requiring prior definition of requirements and scope of work and that
they had "sufficient justification" for their decision to appoint SBI CAPs as
their consultant, which has been objected by the CAG.
Upset over the
reply of the Delhi Government that the details of the calculations were only
available with the consultant, who normally do not disclose their computer
modelling, as they regard it as their business secret, the CAG said: "While the
general methodology had been explained, the basic figures adopted, weightages
given and assumptions made were not indicated and hence the basis of final
figure of Rs. 3,160 crores could not be verified. The Government evidently
relied solely on the report of the consultant."
The CAG concluded
that the dilution of the targets of reduction of the aggregate technical and
commercial (AT&C) loss from that envisaged in request for proposal had an
adverse impact on the tariffs. "This would deprive the Transco of an accrual of
Rs. 3,929 crores," it said. Defending its decision, the Delhi Government argued
this meant enhancement of the level of Government assistance from Rs. 2,600
crore to Rs. 3,450 crore. "The choice was between raising the assistance level
and not privatising," the Government defended.
The CAG observed
that this increase in financial assistance not only put an additional burden of
Rs. 850 crores but also resulted in an increase in the average tariff.
Further there was a
difference of Rs. 3,107.62 crore between figures of total receivables depicted
in the Balance Sheet ending March 31 2002 of the Delhi Vidyut Board and that
worked out by the consultant partly due to arrears due from large industrial
consumers not being fully taken into account. Though the Delhi Transco raised a
bill for Rs. 77.47 for stores transferred to the discoms, it could not realise
the amount so far. Further, Rs. 26 crore worth of scrap/dead items recoverable
from discoms was not taken into account, it pointed out, adding that excess
rebate was deducted by the discoms in respect of payments to be made to Transco
under the Bulk Supply Agreement resulting in short payment of bills.
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