CAG pegs MSEB’s lost revenue at 3,000 cr. Electrifying!

Delay in payment of dues by the MSEB for supply of power and fuel attracted surcharge/interest of Rs 620.94 crore besides a cut in the central plan assistance to the state government. The National Thermal Power Corporation (NTPC) levied late payment surcharge of Rs 116.56 crore up to March 1999 on the MSEB while subsidiaries of Coal India Limited levied interest charges amounting to Rs 461.65 crore for delayed payment of their dues.

Besides, the Gas Authority of India Limited, the Oil and Natural Gas Corporation and the state government too levied interest charges of Rs 42.73 crore for delay in payment of their dues, the report states. However, the charges were disputed by the MSEB.

Pending dues of Rs 62.05 crore from the MSEB, the central government from October 1998 to July 1999 deducted the amount from the central assistance for the state government’s annual plan which affected developmental programmes in the state, the CAG has observed.

The reason for non-payment of dues were poor debt recovery of Rs 4,358.4 crore (equivalent to the board’s 5.17 months’ revenue) from industrial consumers, diversion of revenue funds and locking up of funds amounting to Rs 101.56 crore in incomplete schemes and idle stores, the report says.

The MSEB’s functioning, especially during the Seventh Five Year Plan (1985-1990) has attracted sharp criticism from the CAG. For instance, the CAG has rapped the board for loss of potential revenue amounting to Rs 791.29 crore due to loss of 1,0341.77 million units (MUs) as the plant load factor in thermal and gas-based plants were below the norms fixed by the Central Electricity Authority.

Further, against the targeted generation of 1,39,304 MUs during the Seventh Five Year Plan period, the MSEB could generate only 1,23,674 MUs and it had to purchase power involving extra expenditure amounting to Rs 945.81 crore. The reason for shortfall in generation was a delay in commissioning four power generation units, underutlisation of a gas turbine power station at Uran in Raigad district and a shortfall of 140 megawatt in capacity-addition through hydel plants.

Consequently, the MSEB had to purchase 26,603 MUs during 1985-1990 from Tata Electric Companies, Nuclear Power Corporation and NTPC, incurring an avoidable expenditure of Rs 945.81 crore compared to the average cost of purchase and generation, the CAG has observed.

Transmission and distribution (T&D) losses have also had an adverse affect on the MSEB’s coffers. Against the norm of 15 per cent fixed by the CEA, T&D losses increased to 17.6 per cent in 1989-90 from 14.31 per cent in 1987-88 resulting in a loss of Rs 87.31 crore. This, however, pales compared to the T&D losses, which cost the MSEB Rs 420.05 crore between 1993-94 and 1997-98, the report says.

Non-completion of system improvement schemes in four urban centres, scheduled to be completed between 1994-95 and 1997-98, deprived the MSEB of additional estimated annual potential revenue of Rs 222.15 crore. The board was expecting to augment its revenue by way of reduction in line losses (Rs 106.78 crore) and additional sale of energy (Rs 115.37 crore) due to the four system improvement schemes supposed to be completed between 1994-95 and 1997-98.

The CAG has also listed several cases such as delay in supply and installation of EHC Shunt Capacitators and shortfall in installation of HT/LT Shunt Capacitators for the failure to earn revenue to the tune of Rs 100 crore.

The MSEB’s failure to improve its recovery of dues from consumers resulted in suspension of loans in October 1996 and its cancellation in May 1998 by the World Bank, forcing the MSEB to meet expenditure of Rs 588.71 crore from borrowings and diversion of funds meant for revenue expenditure, the CAG has remarked.