Anatomy of a power scandal

Bharatiya Janata Party MLA Manohar Parrikar, who exposed the scandal on the floor of the Goa Assembly in March this year, filed a First Information Report with the Goa police against Godinho and chief electrical engineer T Nagarajan last month.

The entire file on the power rebate scheme made available to The Indian Express indicates how Godinho, despite objections from the state legal department, revived the 1991 notification in 1996 even though it was withdrawn a year before.

The minister, however, insisted that the earlier notification was too cumbersome as a result of which no rebate was paid to any unit till he amended the notification.

Parrikar, however, alleged that the amendmentwas deliberately worded to create loopholes benefiting units which were not eligible for rebate under the original 1991 notification. Godinho has denied this (see interview) saying only one unit wrongly benefited by Rs 40,000, which is being recovered.

Even as the Goa Cabinet voted not to ratify the amendment, Godinho blamed his troubles on his political rivals.

He said the proposed amendment was cleared by the finance department, which is headed by Chief Minister Pratapsinh Rane. The relevant file containing the clearance from the finance department had been deliberately misplaced so as to implicate him, Godinho said.

CHRONOLOGY OF THE SCAM

September 30, 1991: The then government of Goa headed by Ravi Naik issued a notification allowing 25 per cent rebate in electricity tariffs.

However, the rebates would be on tariffs “chargeable under government notification dated 27.6.1988 for a period of five years from the date of which supply of electricity is made available to such units,”the notification says. It says only units which apply for availing high tension or low tension power supply on or after October 1, 1991, will be eligible for rebate.

In his complaint, Manohar Parrikar contended that the objective behind allowing rebate based on 1988 tariffs rather than on tariffs prevailing on the date of actual consumption was to reduce loss of revenue. However, Godinho in his interview to The Indian Express insisted that such a clause was included due to oversight.

The notification remained unnoticed till 1998, when industries coming into Goa under the tax holiday scheme began applying for rebate.

On the application of one Rahul Exports, letters were exchanged between the industries department and power department clarifying who would administer the power rebate.

August 8, 1994: The then secretary, power, V M Pachuau, noted that 36 high tension and 75 to 85 low tension consumers may have to be paid Rs 3.5 crore by way of rebate (which was calculated on the 1988 price ofelectricity and not the tariff prevailing in 1994). He recommended discontinuing the subsidy due to budgetary constraints.

March 31, 1995: Government of Goa issued a notification rescinding the notification dated September 30, 1991, with effect from April 1, 1995. Confusion persisted as to how the rebate would be disbursed to those who had applied till March 31, 1995.

November 6, 1995: In a note to the then chief electrical engineer, the under- secretary, power, Angola Menezes, clarified that units which were supplied power up to and inclusive of March 31, 1995, shall become eligible for the rebate for a period of five years. The rebate to be given on the energy component of the bill would be adjusted against subsequent bills instead of an outright refund.

November 24, 1995: Power Minister Mauvin Godinho called for the file saying it needed to be discussed with Chief Minister Pratapsinh Rane. Subsequently, he made changes in the note of the power secretary, which included correctionof drafting errors. He also altered the first condition in the original notification which said, “the industrial unit should have applied for availing (this was altered to `applied or availed of’ in the 1996 version) high tension or low tension power supply on or after October 1, 1991…”

This gave rise to the controversial interpretation that units drawing power even before October 1, 1991, would get the rebate. Godinho now admits that one unit got such a rebate for Rs 40,000.

February 14, 1996: Newly appointed chief electrical engineer T Nagarajan proposed to amend the rebate notification even though it was rescinded in order to extend the benefit of 25 per cent rebate to extra-high tension (EXT) consumers. Nagarajan said, “Industrial policy guidelines of Goa has considered industries classified under high tension and low tension categories eligible for 25 per cent rebate as only those two categories existed in power tariff for industries at that point of time.”

He added that following theintroduction of extra high tension category of users in tariff from November 1, 1993 in Goa, the new EXT consumers would not be eligible for the rebate as the EXT classification did not exist in 1991. The file with this note was sent for vetting to the law department.

March 12, 1996: The legal department noted that it “is not legally permissible to give retrospective effect to the said notification”. Godinho, however, insisted on the floor of the House that legal experts had cleared the notification.

April 2, 1996: In reply to a query from power department, law department advised withholding of the notification as Lok Sabha elections are announced.

May 15, 1996: Power department issued draft amendment to the notification including EXT category of users among those eligible for rebate. However, the changes proposed by Godinho on November 24 “applied or availed of” instead of “applied for availing” had not been carried out.

July 30, 1996: Godinho personally carried outthe changes in the draft notification. The amended notification was issued the following day.

March 1998: Bharatiya Janata Party MLA Manohar Parrikar raised the issue in the Assembly and accused Godinho of corruption on the floor of the House. The power minister protested and ordered suspension of the power subsidy. Parrikar filed an FIR against Godinho and Nagarajan on May 13.

June 8, 1998: Chief Minister Pratapsinh Rane called a Cabinet meeting to ratify the amendments made to the rescinded notification. Godinho presented a note by the advocate general which stated that the amendments made by the power minister to the rescinded notification were in order.

Finance secretary Vivek Rae repeated the legal department’s warning that such an amendment could be illegal. “By extending the scope to cover units who (sic) had applied for power connections even before October 1, 1991, the notification dated August 1, 1996 opened up the power subsidy scheme to a larger category of units which was notintended,” Rae wrote.

He also warned that EXT category users are power guzzlers and granting them rebate would cause financial implications. The finance secretary also added that granting of 25 per cent subsidy on the prevailing tariff instead of the 1988 tariff would increase the government’s financial liability manifold.The Cabinet therefore decided not to ratify the amendments but decided to honour the entitlements under the scheme till March 31, 1995.

It also voted to abide by the finance secretary’s recommendation which called for the government to recover subsidies paid to companies which did not come under the ambit of the 1991 notification.

It’s a conspiracy against me: GodinhoOn finance secretary Vivek Rae’s criticism: Everyone is trying to save their skins. The finance department was part of the decision to grant 25 per cent rebate on prevailing power tariffs. According to the Additional Resources Mobilising (ARM) plan of the finance department, the rebate is to be paid in 60monthly installments.

On the alleged conspiracy: I had written a letter to the finance department on June 19, 1996, regarding the financial implication of the rebate. I received the reply shortly afterwards. The file has been misplaced by certain persons to defame me. I don’t want to start another controversy by naming the person who cleared the proposal from the finance ministry.

Motive behind amendment: The mention of rebate on 1988 tariffs in the original could have been made inadvertently. I feel the earlier notification actually intended to grant rebate at prevailing tariffs. By substituting `apply for availing’ in the place of `apply or avail’, units which applied for connections before 1991, but were provided connections after the policy came into effect, could also be given rebate. This was not possible earlier.

On misuse of the notification: Only one unit was wrongly paid Rs 40,000 as rebate. We are recovering the money.

On the Cabinet decision not to ratify theamendment: As the Chief Minister, Pratapsinh Rane has already said, it was within the competence of the power minister to amend the notification and Cabinet ratification was not required. According to legal opinion, the 1996 opinion when read with the 1991 notification does not amount to expanding the scope of the original notification.