Friday, August 12, 2022

CAG pulls up PowerGrid for poor planning, non-collection of revenue

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  • The CAG audit also highlighted a mismatch in planning transmission lines for evacuation of power from generation projects

  • It added that out of eight generation-linked transmission projects selected in audit that were completed till July 2018, there was delay in commissioning of six transmission systems

New Delhi: The Comptroller and Auditor General (CAG) of India has pulled up Maharatna power PSU PowerGrid for shoddy planning of infrastructure and non-collection of Rs 6,853 crore relinquishment charges from power companies that have surrendered transmission access and Rs 112.51 crore as additional return on equity (RoE). In its latest report published on Friday, the CAG has said that no network plan was found available in the records or on the website of the central transmission utility.

According to the guidelines issued by the Ministry of Power, the network plan must include projects for new transmission lines and substations and strengthening and upgradation of existing lines. “In the absence of network plan, a structured mechanism for timely dissemination of the likely additions/ modifications to the transmission system to stakeholders, and for assessing and focusing on the requirement for upgradation of the existing lines in advance was not available,” the CAG report said.

‘26,836 MW of LTA surrendered, but no relinquishment charges collected by PowerGrid’

The CAG said that a total of 26,836 MW of LTA was surrendered by power companies between September 2010 and March 2018. However, PowerGrid has not collected any relinquishment charges from these customers till date. “As a result, an amount of Rs 6,853.43 crore is yet to be recovered from the relinquished customers. Hence, due to non-collection of compensation charges by PGCIL for stranded capacity, consumers are being put under extra financial burden,” it said. The Appellate Tribunal for Electricity (APTEL) has stayed collection of relinquishment charges by PowerGrid.

Mismatch in planning transmission lines

The CAG audit also highlighted a mismatch in planning transmission lines for evacuation of power from generation projects. As per Regulations of Central Electricity Regulatory Commission (CERC), transmission system associated with a generation project should precede the date of commercial operation of the generating station at least by six months.

It added that out of eight generation-linked transmission projects selected in audit that were completed till July 2018, there was delay in commissioning of six transmission systems associated with generation projects in the states of Chhattisgarh, West Bengal and Odisha due to which there was congestion in evacuation of power. Also, interim arrangements had to be made for 21 to 56 months to evacuate the power produced by five generating stations.

Delay in project execution

The CAG report said that out of 18 projects selected for audit, only two projects were completed within scheduled time and 13 projects were completed with delays ranging from 4 to 71 months. Remaining three projects were under execution with anticipated delays ranging from 6 to 109 months in completion. The main reasons for delay in projects were delay in submission of proposals for forest clearance, delay in providing front/site by PGCIL, delay in supply/ issue of material/ quantity clearance by PGCIL, delay in finalising amendment in LOA/ approval of Bill of Material, etc. could have been controlled by better project management. Due to delay in completion of projects within prescribed CERC timelines, PGCIL also lost the opportunity of earning Rs 112.48 crore during the project life towards additional Return on Equity as part of tariff, said the CAG.

Also read: Cabinet okays PowerGrid InvIT; assets worth Rs 7,000 cr to be monetised

The auditor said that in the absence of a network plan, PowerGrid did not prepare a separate plan for the upgradation of the existing system. During 2012-17, while the company commissioned 233 new lines, upgradation was carried out to only eight lines.

It also said the company had not devised any mechanism for assessing the utilisation of the completed and commissioned transmission lines. The audit found that peak/ maximum power flows in 18 out of 30 lines (60 percent) remained below 40 percent of their respective maximum load ability during the period from their inception to March 2019.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram and stay updated)

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