CAG detects scam: ‘HP govt gave undue benefits of Rs 209 cr to Jaypee Group’

The company sold the project after obtaining permission to do so from the state last year.

Written by Ashwani Sharma | Shimla | Published: April 13, 2016 8:07 am

THE Himachal government, despite its precarious fiscal health and high debt, allegedly gave undue benefits to the tune of Rs 209.28 crore to power developer, the Jaypee Group, which owned the 1,000 MW Karcham Wangtoo hydel project in the state’s Kinnaur district.

The company sold the project after obtaining permission to do so from the state last year.

According to the Comptroller and Auditor General (CAG), Jaypee allegedly hid facts about the actual capacity of the hydel project and had hiked it to 1,200 MW — 200 MW over and above the capacity approved by the Central Electricity Authority (CEA) and the central government.

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The CAG said while the central authority and a committee it had set up detected the alleged illegality, the Congress government in Himachal allegedly allowed the company to continue with production in 2015, without even a fine. “The failure of the (state) energy department to detect the capacity addition on time and the non-levy of Rs 209.28 crore on account of the capacity addition charges, additional free power royalty and the firm’s share to the local area development fund constitutes extension of undue favour to the power developer,” Ram Mohan Johri, principal accountant general (audit), Himachal Pradesh, said here on Tuesday.

The Karcham-Wangtoo hydel project was allotted to Jaiprakash Industries Limited, for an installed capacity of 900 MW, through the MoU route in August 1993. The CEA accorded techno-economic clearance, allowing the firm to enhance capacity to 1,000 MW, in March 2003. The project was commissioned in May 2011 at a cost of Rs 6,903 crore.

In 2011, however, the CEA detected that the turbine in each generating unit had been designed for 300 MW, in effect ensuring that the normal continuous output was of the total capacity of 1,200 MW – 20 per cent above the rated output of the machine. A state appointed Technical Committee (TC) also confirmed the specific deviations in June 2013.

The CAG said that despite this, the state government granted the company approval to continue with production, in 2015. The Himachal energy department did not levy any charges for the capacity addition and for royalty on the additional free power royalty between 2011 and 2015, the auditor said. It added that Jaypee paid only Rs 32 crore to the Local Area Development Fund instead of the Rs 102 crore it was obligated to pay as per the terms of the MoU.

“When we posed the questions to the government authorities, they admitted that the company had no techno-economic clearance for the 1,200 MW. They also failed to levy dues to the tune of Rs 209.28 crore,” Johri said during a press interaction. He added that the CAG would recommend a vigilance probe against officials of the Energy Department. “Since it’s public money, the accountant general (AG) will invoke powers to refer the matter for a probe by the state vigilance or any other agency after waiting for a response from the government and if it fails to act. We have taken up the matter with the government,” Johri said.

Two more cases

The CAG has found alleged grave irregularities in the state government’s investments in two other cases. It alleged that the state invested in a thermal power plant without any feasibility study and that its selection of Joint Venture Partner, EMTA, resulted in a loss of Rs 3.98 crore to the exchequer as the work on the project never began. The case is being probed by Enforcement Directorate (ED). Another regularity of Rs 71.64 crore was detected by the CAG relating to the grading and clarification of timber being sold by the HP State Forest Corporation.

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