In last 2 years,govt lost R 489.86 crore and in next 18 years,the loss will mount to R 5,348 crore
Two years after the Mayawati government gave the power distribution franchise of Agra to Torrent Power Ltd,an audit by the Accountant General has held that faulty agreement with Torrent has led to a loss of Rs 489.86 crore in the last two years,and in the next 18 years of the agreement,the loss will rise to Rs 5,348.35 crore .
The audit says rules were bent to help the bidder. The agreement between Torrent Power Ltd and Dakshinanchal Vidyut Vitran Nigan Ltd (DVVNL) of Uttar Pradesh Power Corporation Limited (UPPCL) was signed on March 17,2010 and the actual work started on April 1,2010.
We have long been demanding cancellation of the franchise to Torrent as it is full of anomalies. Now,even the Accountant Generals report has mentioned the exact loss. We want the state government to cancel the contract of Torrent in Agra and not to go ahead with the one in Kanpur, said Shailendra Dube,convenor, UP power employees Sanyukta Sangharsha Samiti.
The audit concluded that DVVNL and UPPCL failed to achieve the objectives of minimising aggregate distribution and commercial losses,bringing improvement in billing and revenue collection for which the distribution franchise was given to a private firm.
Some of the significant issues highlighted in the audit include:
Done in haste
The audit found that bids were opened on February 24,2009 at 2 pm and significant process like technical evaluation,financial evaluation,discussion with the bidder,submission of revised bid by the bidder and even discussion with the officials of DVVNL,all took place on February 24 itself. On the very next day,the Energy Task Force (ETF) recommended the government to appoint Torrent as distribution franchisee,which was done without wasting any time on February 26. Ideally,the technical bids are opened first and only after their scrutiny,the financial bids are opened. However,in this case,the audit found utter disregard of the tender procedure.
Proof of collusion
The audit found that the decision to award the contract to Torrent was taken on the basis of the technical bid evaluation report by the consultant,which included technical evaluation,financial evaluation as well as discussion that took place with the bidders. Neither UPPCL nor DVVNL objected to such a role of the consultant. It is clear that the consultant and the management had colluded in awarding the contract and mere formality was completed, the report states.
Even as the audit has not taken any names,in January 2009,the UP government made Navneet Sehgal Chairman-cum-Managing Director of UPPCL. He was secretary to then chief minister Mayawati and was given additional charge of the power corporation.
The audit found that instead of initial criteria of quoting the annualised input rate on the basis of minimum reserve price,which was approved by the ETF on February 6,2009,the condition was amended and bidders were required to quote expected energy input rate. This led to a loss of Rs 113.94 crore in the first year and Rs 108 crore in the second year because the minimum reserve price approved by the ETF was Rs 2.10 per unit for first year and Rs 2.45 per unit as the levelised rate for the remaining 19 years of franchise. However,the contract was given to Torrent at a negotiated price of Rs 1.54 per unit for the first year and the levelised rate of Rs 1.95 per unit for the remaining 19 years.
Loss Target relaxed
The audit found that the UPPCL had request in September 2008 to appoint a distribution franchisee with the objective of reducing aggregated,technical and commercial losses by 10 per cent in the first two years and 15 to 20 per cent by 2012. However,this pre-condition was changed in the bid document and the target was first kept to achieve reduction of 15 per cent losses within 5 years. This was further relaxed and the reduction was to be achieved in seven years,failing which penalty would be put on the distributor. The audit found that Torrent was selected as the distribution franchisee in Bhawandi area of Maharashtra in 2007 with the target to reduce losses from 58 per cent to 29 per cent in just one year. However,three years later in UP,the same company was given target to reduce losses by 15 per cent in seven years.
Dues target not met
The audit found that against the agreement in which Torrent was to recover arrears of Rs 1,175 crore from current consumers at a commission of 10 per cent and arrears of Rs 694 crore at a commission 20 per cent from the previous consumers,only Rs 20.95 crore recovery from the current consumers could be made while no amount was recovered from past consumers.
Just a draft report: UPPCL
SK Agarwal,Finance Director,Uttar Pradesh Power Corporation Ltd,said the report submitted by the Auditor Generals office on losses due to franchise for power distribution in Agra to Torrent Power Ltd is just a draft report. He said that the corporation would soon be sending its reply to the AG office. Asked about the future of the proposed contract with the company in Kanpur,UPPCL Chairman Anil Gupta said the government would take into consideration all points before going ahead with the contract for Kanpur.