Key audit of Delhi electricity utilities yet to be completed
The regulator had appointed Feedback Ventures ( now Feedback Infrastructure Services Pvt. Ltd ) as a consultant in early 2012 for the capital expenditure review and capitalization of assets for distribution utilities such as Tata-owned North Delhi Power Ltd (NDPL), Anil Ambani-owned BSES Yamuna Power Ltd (BYPL) and BSES Rajdhani Power Ltd (BRPL).
In addition, Medhaj Techno Concept Pvt. Ltd (MTCPL) was appointed
for government owned Delhi Transco Ltd (DTL), the power transmission
company.
With capital expenditure costs estimated to contribute 20%
of the electricity tariff charged from the consumer, such an audit would
have had helped the regulator ascertain if there had been any dressing
up of books. Power purchase costs contribute the balance 80% of the
electricity tariff.
According to the tender document reviewed by
Mint, the consultant was to review the capital expenditure for the
period 2006-07 to 2010-11, capitalization and physical verification of
assets of BRPL, BYPL and NDPL. It is the DERC that approves capital
expenditures and subsequent capitalization and hence the need for such
an audit to verify the utilities claims.
It is estimated that BRPL, BYPL and NDPL have invested more than Rs.8000 crore over a 10-year period since privatization.
P.D.
Sudhakar, chairman, DERC confirmed the delay and said: "The review is
still going on. The major work has been completed and the report has to
be finalized. Both the reviews have been delayed."
"The capex review
is very important. DERC has completely failed its job in finalizing the
account of the distribution companies for the last 10 years," said
Shakti Sinha, Delhi's former finance and power secretary.
AAP has promised to halve power bills and to bring the electricity utilities under the purview of the Right to Information Act.
Feedback
was to "examine the procurement and turn-key contracts", and "comment
on compliance with the competitive bidding guidelines of the Commission
as well as reasonableness of costs at which the equipment have been
procured".
The tender condition also stipulated, "The Consultant
shall comment on the reasonableness of quantities procured vis-a-vis the
quantities in various schemes for which the Commission has granted
in-principle approval."
The report was to be submitted within three
months from the date of award, subsequently during the pre-bid meeting
it was extended to four months, with a provision of further extension of
one month. The report is still awaited.
"While procurement for
material is done through competitive bidding, some cartelization can't
be ruled out," said a former DERC member requesting anonymity due to the
sensitive nature of the issue.
These distribution firms have a
consumer base of 4.231 million customers, with Delhi's power demand in
the region of around 5,000 megawatts (MW). Kejriwal has already said
that he would ask for an audit of the distribution utilities once AAP
forms the government.
Vinayak Chatterjee, chairman and managing
director, Feedback Infrastructure Services in an emailed response didn't
answer the specific queries and said, "It is correct that Feedback
Infra has been appointed by Delhi Electricity Regulatory Commission as a
consultant for Capex Review and Capitalization of Assets for Power
Utilities in NCT (national capital territory) of Delhi. The contract has
a provision of confidentiality which prevents us from disclosing any
further information) in any manner."
Queries emailed to MTCPL and NDPL on late Wednesday evening remained unanswered.
A spokesperson for BSES declined comment.
A
DTL spokesperson said, "The consultant was appointed by DERC and we are
not aware of any outcome." He requested Mint to contact DERC for
information on the same.
Kejriwal has alleged that Delhi residents
have been paying twice what they should be for electricity. Similar
allegations have been levelled by the Bharatiya Janata Party. Kejriwal
has also accused former Delhi chief minister and senior Congress leader
Sheila Dikshit of intervening to stop an order in May 2010 that sought
to reduce the electricity tariff in Delhi by 23%.
"While the rapid
efficiency gains during the period 2002-2010 required negligible or
minimal tariff increases during that period, inaccurate demand
forecasts, signing of long term power purchase agreements to ensure
security of supply, rising power purchase costs (compounded by CERC
regulations of 2009-2014) and selling surplus power at a loss in the
short term power market—necessitated tariff increases in subsequent
years. It was aggravated by issues around lack of capex review and
billing database reviews by the regulator, contracts awarded to
interrelated parties at inflated costs, and speeding meters,"said
Sambitosh Mohapatra, executive director at PricewaterhouseCoopers Pvt.
Ltd.
While DTL procured power for Delhi, since 2007 it was the
distribution utilities who did the same through Delhi Power Procurement
Group comprising representatives of power distribution companies and
DTL.
According to PricewaterhouseCoopers, the power purchase cost has
spiked since 2009 with the distribution utilities incurring losses in
power trading. It is estimated that the utilities suffered a loss of
Rs.900 crore in 2011-12 due to inaccuracies in demand forecasting and
fall in rate of sale of power in the short-term market nationally.
"All
these allude to a greater malaise of lack of trust, oversight and
reviews at appropriate time by various stakeholders. Government,
regulator and utilities should work transparently to build trust between
all stakeholders and not let a PPP (public private partnership) success
story go kaput," Mohapatra added.
In : POWER NEWS