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Govt spent more than required on power: CAG
December, 25th 2009

The Comptroller and Auditor General of India (CAG) in his report, on Thursday, has slammed companies under the ministry of energy and ministry of home for mismanagement, which resulted in losses of Rs375 crore and Rs100 crore respectively.

The CAG exposed mismanagement in the Maharashtra State Electricity Distribution Company Limited (MSEDCL), which failed to avail of the lower tariff power made available by the Centre. This resulted in losses of Rs374.79 crore. MSEDCL, which is a state government body, has been entrusted the job of electricity distribution across Maharashtra.

The state has faced a severe power crisis for the past ten years and the shortage has peaked to 4,500 MW, which has forced the state to procure power on a short-term basis at a higher cost from the private sector and neighbouring states.

The CAG report, however, said: "Despite availability of power at cheaper rates, the distribution company of the state government failed to avail the quota to the hilt thus causing state treasury an additional amount of Rs374.79 crore for buying power from other sources."

According to the report, the power purchased from private companies varied between Rs2.92 and Rs5.18 per unit. If the same had been purchased from the National Thermal Power Corporation (NTPC) and Nuclear Power Corporation of India Limited (NPCIL), the tariff per unit would have come down to Rs0.85 and Rs2.88 during 2005 to 2008.

The report added, "MSEDCL did not draw power from cheaper sources of NTPC and NPCIL units but instead purchased power from power trading companies which were costlier sources."

The CAG has also urged the government to take concrete measures to streamline the power purchase process. "The company did not recover the average cost of sale of power, which resulted in loss of revenue. The state government should have a formal structure of both long-term and short-term power purchase agreements as power purchase agreements with clauses, thus protecting its financial interests."

The CAG also pointed out shortcomings with the functioning of the Maharashtra State Police Housing and Welfare Corporation Limited, which comes under the home department. "The corporation whose priority was police housing did not utilise funds of Rs100.27 crore received for 33 works." Of the total funds only Rs22.13 crore were spent for police housing and Rs66.33 crore received against 16 works were diverted to other works, the report added.

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