CAG 'gags' power tariff revision

The power utilities’ claim of losses to seek a tariff revision has suffered a shocking jolt as a Comptroller and Auditor General (CAG) report points out that the energy sector had lost over Rs 300 crore since 2004 due to its various projects.

The report for the period 2004-2009 has brought cheers among consumers who have been objecting to a power tariff revision proposal.

According to the audit report, the injudicious purchase of equipment and their idling, among other factors, by the Karnataka Power Transmission Corporation Limited (KPTCL) have incurred losses worth Rs 95.67 crore to the corporation.

The report — Trans Aud 2006-07 — a copy of which is available with Deccan Herald, points out that the KPTCL has ended up paying an additional Rs 89.98 crore to Tannir Bhavi Power Corporation Limited, now GMR Energies Limited.

As per the Power Purchase Agreement (PPA) between the KPTCL and Tannir Bhavi Power Corporation, the charges towards the supply of energy are to be calculated and paid in two parts: fixed and variable. The company was supposed to pay fixed charges for the energy purchased and not purchased.

“The PPA provides for annual truing-up exercise, but not ensuring the contractual conditions regarding the deemed generation payment had resulted in an overpayment of Rs 89.98 crore during 2001 and 2007,” the report said.

The KPTCL also suffered a loss of Rs 46.89 crore through the payment of ex gratia to “medically unfit employees” after introducing the voluntary exit scheme (VES). The VES, as per the report, was in violation of the Cadre and Recruitment Rules of the company.

The report also mentions that the KPTCL and Escoms have failed to achieve total computerisation despite spending Rs 14.44 crore. Bescom, especially, had awarded the work of redesigning, customising and maintenance of 52 sub-divisions to a City-based software firm, Zygox, for Rs 43.20 lakh. But when the firm failed in its effort, the contract was awarded to another company for Rs 12.73 lakh.

The report also says that Rs 70 lakh was paid without inviting tenders to Tata Consultancy Services.

As per norms, the Karnataka Electricity Regulatory Commission (KERC), which has the statutory responsibility of protecting the interests of consumers, has to conduct a prudence check. Tariff principles say any expenses incurred by a licensee are subject to prudence check by the commission which will ensure that any extravagant expenditure incurred by the licensee is not allowed as a pass-through.

KERC chairman M R Sreenivasa Murthy told this newspaper that prudent check was not possible at this juncture as the tariff hearing was on. However, he said, “We will treat it as a separate matter and take it up during next tariff hearing.”