The Hindu Business Line : CAG report cites mismanagement of PSUs in AP

THE report of the Comptroller and Auditor General (CAG) of India on the audit of Government companies and statutory corporations in the State for 2003-04 has highlighted management deficiencies having financial implications.

The irregularities include unproductive expenditure; imprudent investment; locking of funds; premature sale of bonds; extension of the one-time settlement scheme to ineligible beneficiaries; sale of land lower than the market rate; violation of contractual obligations; undue favour to suppliers of power; non-recovery of dues and extra expenditure on purchases.

The report stated that the State-owned Singareni Collieries Company Ltd had sold high-return-yielding bonds to discharge low-interest-bearing loans, resulting in a net loss of interest earnings worth Rs 28.48 crore.

Similarly, CAG observed that the Central Power Distribution Company of AP Ltd had incurred an avoidable additional expenditure of Rs 9.58 crore on the procurement of 2.55 lakh meters on a repeat order basis.

As per the audit report, the AP State Film, Television and Theatre Development Corporation Ltd had sold land to an entrepreneur without considering either the market rate or the rate offered to another entrepreneur in the same area, resulting in a loss of revenue of Rs 7.25 crore.

The PSUs had also not fully followed the State Government guidelines for implementing the voluntary retirement scheme, leading to a loss of Rs 3.07 crore.

On fund management in power sector companies, CAG said that due to delay in realisation of power dues and excess holding of stocks, dependence on borrowing increased.

Consequently, outstanding loans of the six power sector companies in the State increased from Rs 5,870. 04 crore in 1999-2000 to Rs 9,971.31 crore by March 31, 2003. This apart, the report stated, lack of pursuance, delay in payment of premium and delayed restructuring of high cost debt resulted in foregoing an interest benefit of Rs 23.40 crore by AP Generation Corporation (AP Genco) and Transmission Corporation (AP Transco).

The thermal power stations of AP Genco had held spares worth Rs 111.91 crore in excess of the norm prescribed by the Central Electricity Regulatory Commission, resulting in the locking up of funds with a consequential loss of interest of Rs 13.43 crore.

AP Genco was also said to have mobilised loans worth Rs 450 crore from nationalised banks through a syndicator instead of approaching the banks directly. This had resulted in the payment of an "arranger fee" of Rs 4.5 crore by the corporation.

CAG said that the first stage power plant of the Vijayawada Thermal Power Station of AP Genco had used F grade coal as against the designed D grade, resulting in a loss of generation of 4428.71 million units (MU) during 1999-2004.

This has lead to a revenue loss of Rs 426.11 crore. Similarly, the designed grade of coal was not used in Kothagudem Thermal Power Station during the five-year period, resulting in loss of generation of 4095.97 MU, leading to a net revenue loss of Rs 153.55 crore.

The report pointed out that the A P Beverages Corporation Ltd had purchased computer application software without examining its compatibility with the actual needs, leading to a wasteful expenditure of Rs 1.51 crore.

On the other hand, the A P State Road Transport Corporation had suffered losses of Rs 2.78 crore due to the delay in calling tenders for hiring out vacant shops and stalls.

The A P State Financial Corporation's acceptance of collateral security from Surya Teja Industries Pvt Ltd, a manufacturer of PVC pipes, without proper verification rendered the recovery of dues worth Rs 1.31 crore doubtful.

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