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Delhi CAG report indicts power discoms, kicks up a storm

The Comptroller and Auditor General, CAG, has found the three private power distribution companies in the national capital allegedly inflating dues from consumers to the tune of a whopping Rs 8,000 crore.

delhi Updated: Aug 19, 2015 01:24 IST
HT Correspondent
HT Correspondent
Hindustan Times
Power discoms,Delhi,CAG

A draft report by the office of the Principal Accountant General (Audit), Delhi, has come down heavily on the three private power distribution companies that had taken up power distribution functions from the government as part of a privatisation drive.

The report, a copy of which is with HT, says the three private discoms-Tata Power Delhi Distribution Limited (TPDDL), BSES Rajdhani (BRPL) and BSES Yamuna Power (BYPL)-inflated regulatory assets to the tune of Rs 7,956.91 crore to the detriment of the consumers.

Regulatory Assets (RA) are previously incurred losses that are recoverable from consumers with the approval of the Delhi Electricity Regulatory Commission (DERC), the power regulatory authority in the national capital.

The report says the RA was inflated due to failure by the discoms in including certain incomes as non-taxable income, not accounting or short accounting of certain other incomes, accounting errors, not bringing clerical errors to the notice of DERC and non-recovery of wheeling charges from other licensees.

“Further, violation of DERC regulations, in reimbursement of taxes, misrepresenting the facts to DERC, netting off income by expenses, misclassification of assets and claiming expenses thereon, claiming excess return on equity and carrying cost of RA has also resulted in increase in RA,” it said.

“Based on unrealistic demand projections, power was contracted in excess of actual requirement through long term power purchase agreements and surplus power had to be sold at a huge loss thus increasing the cost of power,” the report said adding that Discoms failed to protect the interest of consumers.

The report also underlines a plethora of acts of omission and commission including flouring of good corporate governance norms which added to the growing burden on power consumers in the capital.

If approved for finalisation in its present form, the report has huge implications for the power tariff structure in Delhi which stands to be drastically slashed.

The draft report, that appeared in a media report on Tuesday, kicked up a controversy with the three principal political forces in Delhi — the ruling AAP, the BJP and the Congress — coming out with immediate reactions.

The Aam Aadmi Party claimed it as a victory for their agitation against the previous Sheila Dikshit government over inflated power and water tariffs. Chief Minister Arvind Kejriwal said power tariff will come down if the report turns out to be true.

"If whatever has come out is true, then it will be a very big thing. The scam of Rs 8,000 crore has surfaced. Delhiites will be benefited as tariff will have to be brought down. We have received a draft report and we are studying it. Let the final report come," he said.

Kejriwal has been a staunch critic of the discoms and have repeatedly levelled charges of corruption against them.

First Published: Aug 18, 2015 22:40 IST