CAG faults govt. dues to discoms, delay in completion of projects

‘Clearing dues essential to ensure fiscal turnaround of power utilities’

The Comptroller and Auditor General (CAG) of India has suggested that the Telangana Government pay dues of energy charges from all government departments and local bodies to the distribution companies (discoms) and also compensate them appropriately while implementing new policies to ensure financial turnaround of the power utilities.

The recommendation made in the State Finances Audit Report for 2017-18, which was tabled in the Legislative Assembly and Council on Sunday, assumes significance in the backdrop of almost all discoms, except the Uttar and Dakshin discoms of Haryana, in the country running in losses in spite of their debt being taken over the by State governments concerned after joining the Ujjwal Discom Assurance Yojana (UDAY).

Union Minister of State for Energy R. K. Singh recently stated here that dues from various government departments and local bodies in Telangana to the two discoms were to the tune of ₹9,500 crore and the utilities’ financial health would improve only if the dues were cleared.

In its comment/observation on investment in public sector undertakings as part of its audit report, the CAG said as of March 31, 2018, the State government’s investments in statutory corporations, government companies, joint stock companies and cooperatives stood at ₹16,365 crore. The Return on Investment (RoI) was, however, low at 0.62% while the average rate of interest on the government’s borrowings was 7.21%. As the government investments were highest in power sector, losses from it (₹6,202 crore) accounted for 94% of total losses (₹6,619 crore) incurred by State PSUs in 2017-18.

Further, the CAG report observed: “The State government’s actions have adversely impacted the discoms, which in turn impacted the Return on Investment”.

On irrigation

On its observation on capital outlays and incomplete projects, the CAG report suggested that the government compile working results of major irrigation projects to assess benefits from persistent heavy outlays. “The working results should guide future investments in the sector,” the report said.

Stating that the State Government had treated creation of infrastructure as a priority area since formation of the State, the CAG report said ₹79,236 crore had been spent on capital projects during 2014-18. Within the capital projects, more than 50% of the expenditure was on irrigation and flood control, except in 2016-17. However, delay in completion of projects had adversely affected the quality of expenditure and deprived the State of intended benefits and economic growth, the report said.

The CAG report pointed out that “in respect of 19 irrigation projects, whose original cost was ₹41,201 crore, the delays ranging from 3 to 11 years led to escalation of projected cost to ₹1,32,928 crore. So far, ₹70,758 crore was spent on these incomplete projects”. The CAG also faulted the State government for not disclosing financial results of any of the irrigation projects.

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