Power Ministry did not follow instructions from PMO

The Power Ministry did not follow instructions from the Prime Minister’s Office to form special purpose vehicles for awarding six hydro power projects in Arunachal Pradesh.

This is observed by the Comptroller and Auditor General of India in its audit on hydro power projects.

The companies reviewed by CAG include NHPC, NHDC, SJVN, THDC India and NEEPCO.

“Delay in execution of 16 projects by public sector companies resulted in revision of their initial approved cost of Rs 30,005 crore to Rs 44,712 crore. In the seven completed or ongoing projects, the cost overrun was in the range of 53 to 148 per cent,” CAG said.

These delays in commissioning of projects have led to losing the opportunity of generating 26,282.97 million units of electricity annually. Also, additional return on equity of Rs 1,474.57 crore permissible under CERC Regulations, 2009 has also been foregone by the companies, the national auditor observed.

CAG has said that NHPC extended undue advantage to HJV (led by Maytas). NHPC considered bid of Maytas in case of civil works package of Chutak project though it was decided to set aside their bid in view of poor performance in Parbati-II project.

The audit has pointed out that NHPC agreed to compensate a contractor for compression of schedule of hydro mechanical works relating to Chamera-III and Uri-II projects and paid Rs 13.60 crore to the contractor, which was not justified as the civil works were already running behind schedule and completion of hydro mechanical works without civil works was of no use.

At the same time, NEEPCO suffered a loss of Rs 19.88 crore due to damage of extra items of works executed by the contractor in two accidents in January 2007 and December 2007. This amount could not be recovered by NEEPCO either from the contractor or the insurance company as the contractor had not insured these extra items of work.

The Government allotted projects for 20,700 MW to public sector NHPC. Out of this, only one project for 2,000 MW is being implemented by NHPC. And four of the other projects were allotted to private players by the State Government.

The decision to move from SPV to NHPC and then to private developers delayed execution of projects. The projects originally allotted in May 2000 have not yet (March 2012) been initiated even after lapse of more than 12 years.

The CAG said in its audit of capacity expansion in hydro power sector that there are significant deficiencies in the projects right from planning to award of contracts and execution.

“Audit observed that with better planning, co ordination, adequate survey, investigations, coordination and monitoring, the central public sector enterprises could have achieved capacity addition closer to targets,” CAG said.

The national auditor said that the companies were able to achieve just 13 per cent (1,550 MW) of targeted capacity additions by March 2012.

These firms targeted capacity addition of 11,813 MW of hydro power without due diligence and failed to tie up, modalities. "Consequently, the plans had to be scaled down from 11,813 MW to 6,794 MW. Even the scaled down targets, which were almost 42 per cent less than the original targets could not be achieved," CAG said.


(This article was published on August 31, 2012)
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