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CAG report nails power mess, loss up to Rs 14,000 crore


Sonal Joshi,CNN-IBN
Sep 06, 2012 at 07:41pm IST

New Delhi: In yet another trouble for the government, a new report by the Comptroller and Auditor General (CAG) has exposed the rot in the power sector. According to the CAG, the inefficiency of the National Hydroelectric Power Corporation (NHPC) has meant only two of 16 planned projects have been completed.

The CAG report has said that the cost overruns have led to losses Rs 14,700 crore, adding that 10-year target of 11,813 mw was missed while only 1550 mw was added. It further says that the country is currently short of 17,000 mw of power.

Had the project been completed on time, 70 per cent of India's power shortfall would have been met.

The latest report has said that the NHPC and the Power Ministry caused a loss of 10,000 mw of power by not following procedure and trying to help private companies.

Notably, more than half of India went without power for two consecutive days in July and August as power grids in the north and east tripped on excess demand.

According to the CAG report, the delays in implementing 16 hydro power projects resulted in cost overruns of more than Rs 14,700 crore. A delay of about 115 months led to a cost escalation of 148 per cent. The delay also led to the opportunity loss of generating 26,282 million units of electricity annually. Hydropower contributes a good 20 per cent to the total generation.

The CAG says that the 10-year plan to increase the contribution of Hydro power has been wasted. The ambitious target of producing 11,813 mw of power by 2012 fell awfully short as we added just 1550 mw.

The report says that the Union Power Ministry did not follow instructions from the Prime Minister's Office (PMO) in August 1999 to form special group for early completion of projects.

For projects, the Power ministry planned to take 30 months for pre-investment activities, but the power companies wasted 80 months. As many as 11 of the projects in the north and the east are being run by government-owned NHPC. Also, in five out of the 16 contracts, NHPC relaxed criteria to please the five private companies.

The Report says that in one incident, the NHPC extended "undue favour" to Maytas. An ineligible bidder, M/s Nurol, was considered even after bidding dates were closed.

Responding to the CAG, the NHPC said that the corporate plan included the projects after consent of state governments for execution in central sector and further allotment by Ministry of Power. In clearance stage also, the state government is involved at various stages. It also said that the relaxation in pre-qualification criteria was done on a case-to-case basis.

The CAG also observed lack of transparency in allocating of projects to private firms and joint ventures. The losses in this case are not as presumptive as in the coal report, but at the centre of the controversy is a public sector PSU and its bosses. It throws some light on why we still have to live with power cuts.

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