CAG finds deficiencies in JKPDD’s power purchase planning, revenue collection…
Says J&K's power purchase deficit stood at Rs 14,871 cr in 2012-17
Jammu: The CAG’s performance audit of power purchase agreements and electric revenue collection for 2012-13 to 2016-17 have brought out deficiencies in Jammu and Kashmir Power Development Department (JKPDD).
The CAG in its report has flagged shortcomings in power purchase planning, signing and operationalisation of power purchase agreements, and collection of revenue. Besides, it also pointed out financial mismanagement and weakness in internal control.
J&K suffered a power purchase deficit of Rs 14,871 crore during 2012-17. As against an expenditure of Rs 24,299 crore incurred on power purchase during 2012-17, revenue realisation from sale of power was only Rs 9,428 crore, the Comptroller and Auditor General of India (CAG) said in its report on ‘Social, General, Economic (Non-PSUs) Sectors’ for the year ended 31 March 2017.
“The department (PDD) failed to meet its power requirement and the gap between unrestricted demand and self-generation available to the state ranged between 77 percent and 84 percent.
“Around 73 percent to 76 percent of the power requirement of the state was met through purchase from Central Generating Stations,” the report, tabled in the Parliament this week, said.
It said JKPDD incurred an extra expenditure of Rs 840 crore on power purchased during 2012-17 due to deficiencies in planning and non-optimisation of power purchase cost.
“The JKPDD made an avoidable payment of Rs 1,420.26 crore towards late payment surcharge and lost the opportunity to avail rebate of Rs 297.92 crore due to deficient financial management. It also had to shell out Rs 33.67 crore towards fixed charges without availing power due to imposition of regulation for delayed payments,” the report said.
Due to non-completion of transmission infrastructure for evacuation of power, the report said, the department made an avoidable payment of Rs 543.47 crore towards idle capacity charges and energy charges on deemed generation to two power projects.
“Poor collection efficiency resulted in recoverable revenue of Rs 2,508.23 crore ending March 2017,” it said.
JKPDD failed to recover its power purchase cost due to operational inefficiencies like increasing gap between average cost of supply and average billing rate, high aggregate technical and commercial losses, which were at 62.56 per cent in 2015-16 and increased to 67.63 per cent in 2016-17, which resulted in foregone revenue of Rs 10,176 crore.
The report said the department failed to implement revised tariff order approved by the Jammu and Kashmir State Electricity Regulatory Commission, resulting in loss of Rs 10.06 crore to the state exchequer.
“The department had not devised any mechanism for filing objections on petitions filed by the generators,” it said.
Meanwhile, the consolidated position of water usage charges assessed, collected and the balance outstanding against all the 29 power projects in J&K was not available with the department responsible for assessment and collection, CAG said.
“Only Rs 3,971.63 crore, 67 percent of the assessed amount of Rs 5,950.55 crore in respect of 17 power projects had been recovered. Out of the total expenses of Rs 4,159.85 crore from the water usage charges fund, 2.40 percent were allocated for creation of assets, 80.25 percent were used for purchase of power.
“Purpose for which Rs 721.56 crore (17.35 percent) had been transferred to the Common Pool Account, could not be ascertained,” the report said.
It said the revenue from water usage charges had proved to be only an additional resource mobilisation by J&K government, especially for power purchase, and has not served the purpose of establishment and buying back of hydro-electric projects and for capital investments in transmission and distribution network.
…raps JKPCC for poor performance, not finalising accounts
Jammu: The Jammu and Kashmir Projects Construction Corporation (JKPCC) Limited came up for sharp criticism from the Comptroller and Auditor General (CAG) for its poor performance and failure to finalise its accounts amid sharp decline in the value of works from Rs 364.19 crore in 2012-13 to Rs 250.65 crore during 2016-17.
The public sector undertaking (PSU) firm was dependent on the government departments or agencies for works on nomination basis and had failed to secure any work on competitive tender basis, the CAG said in its report on revenue sector and PSU (social, general and economic sectors) on the government of J&K for the year ending March 31, 2017, which was tabled in Parliament this week.
JKPCC was incorporated with the objective of execution of construction works for the state and central governments and PSUs, carry on the business of builders, contractors, engineers, architects, surveyors, estimators and designers in J&K and curb monopoly of private contractors and provide healthy competition between private and public sectors.
“The company had finalised its accounts up to 2010-11 only. The value of works done decreased from Rs 364.19 crore during 2012-13 to Rs 250.65 crore during 2016-17. It suffered loss of Rs 3.95 crore and Rs 11.69 crore during 2014-15 and 2015-16, respectively,” the report said.
It said the shortfall in achievement of targets of value of works done remained between 29 and 50 percent. “Funds ranging between 58.52 percent and 75.55 percent only were utilised on works during 2012-17.”
The report said the service tax of Rs 5.14 crore paid in excess had neither been reconciled nor refund thereof received.
“The company had not submitted revised cost offers, to the extent of Rs 22.66 crore, to reflect enhanced rate of service tax and made payment of service tax at the enhanced rate without actual recovery of Rs 3.45 crore from the project authorities,” the report said.
It said the company was dependent on the government departments and agencies for works on nomination basis and had failed to secure any work on competitive tender basis.
“The quantum of new works obtained declined during 2012-16 from Rs 349.48 crore to Rs 236.03 crore, but increased during 2016-17 to Rs 696.64 crore. Execution of works in excess of the funds released by the project authorities led to accumulation of outstanding balance of Rs 188 crore as of March 2017 and loss of interest of Rs 26.56 crore,” it said.
The delay in completion of works led to increase in cost to the extent of Rs 360.87 crore which was mainly due to poor monitoring by company and slow progress.
It said the company had not framed any recruitment and promotion policy and staff had been deployed at different units in an ad hoc manner. The report said JKPCC did not devise any mechanism for ensuring continuous monitoring and internal control.
“Weak quality control, inadequacy of internal audit and variations amongst performance reports were observed,” the report said.
Jammu and Kashmir had 30 working PSUs (27 companies and three statutory corporations) and three non-working PSUs.
The working PSUs recorded a turnover of Rs 8,357.91 crore as per their finalised accounts as of September 30, 2017.
As on March 31, 2017, the investment (paid-up capital, free reserves and long-term loans) in 33 state PSUs and statutory corporations was Rs 7,426.67 crore, the report said adding the power sector accounted for 43.47 percent (Rs 3,228.68 crore) of the total investment as on March 31, 2017.
The total investment consisted of 21.70 percent towards paid-up capital and 78.30 percent as long-term loans, it said.
It said the investment has grown by 45.08 percent from Rs 5,119.04 crore in 2012-13 to Rs 7,426.67 crore in 2016-17.