In the race to provide power at affordable rates, Modi – government has taken several initiatives. These include increase in supply of cheaper domestic coal, rationalization in coal linkages [giving more to energy efficient generation plants], strengthening of transmission and distribution [T&D] systems, financial restructuring to reduce interest burden, enabling gas based power plants to access gas at cheaper rates [via pooling of imported LNG with domestic gas], incentive to states for reducing theft etc.
However, there is one area where there is unprecedented scope for reducing cost of power supply and yet, it has not got the desired attention and even where the ruling establishment takes considerable interest and wants to act with alacrity, the efforts are frustrated by court’s intervention and institutional rigidities. This relates to financial irregularities and fraudulent practices indulged in by power distribution companies [PDCs].
The case of three PDCs in Delhi viz., BSES Yamuna Power Limited [BYPL], BSES Rajdhani Power Limited [BRPL] and Tata Power Distribution Limited [TPDL] provides a classic example. The financial irregularities committed by these companies leading to high cost of power procurement and distribution and Delhiites made to suffer due to resultant high tariff is a well known fact. This was even made a major election issue by Arvind Kejriwal.
The subject matter was in the court much before Kejriwal was catapulted to the position of chief minister, Delhi when he announced an audit of these companies by the Comptroller and Auditor General [CAG] in January, 2014 immediately on taking charge. He saw a direct link between the deliberate and malafide attempts to increase cost by PDCs – to be unravelled by the audit – and on that basis, promised reduction in tariff to the consumers.
The issue was serious enough to have required urgent attention as this would have helped the government in giving relief [albeit substantial] to millions of customers without it having to give any subsidy from the budget and unnecessarily burdening the tax payers. At the same time, this would have given the PDCs a tough message not to indulge in such omissions and commissions in the future.
But ALAS! all efforts of Kejriwal in this direction have thus far been frustrated by the PDCs exploiting legal loopholes and more than that a pliant judiciary ever willing to allow them succeed in their orchestrations and manipulative tactics. So, first these companies tried to create legal hurdles in the setting up of the audit. When, success eluded them in this, they delayed the process by not extending the required cooperation.
Surmounting all hurdles eventually, CAG submitted a draft report to Delhi government in August, 2015. It found that PDCs had charged consumers excess tariff to the tune of Rs 8000 crores. It also revealed an almost equal amount of ‘inflated’ regulatory assets [RA] – a euphemism for previously incurred losses that can be recovered from consumers if allowed by regulatory authority.
The need of the hour was to finalize the report ‘expeditiously’ after giving an opportunity to stakeholders viz., Delhi government and PDCs to give their comments. But, efforts in this regard were frustrated by a judgement of Delhi High Court [DHC] in October, 2015 which pronounced that CAG has no jurisdiction to audit PDCs. It opined that responsibility for this lay with the regulator viz., Delhi Electricity Regulatory Commission [DERC].
What an anomalous judgement it was! The court was asking the very body [read DERC] which allowed/abetted the irregularities by PDCs to pass muster [in turn, approving tariff hikes on that basis] to do the audit. How can anyone expect a person who himself had complicity in the theft to declare that goods were stolen? Will he ever concede that theft happened and that it had his tacit backing?
Ruling out CAG audit, the DHC has argued that being private companies no public interest is involved whereas, the role of national auditor should be confined to scrutiny of books of government undertakings. What an irony is this? Delhi government holds 49% equity in these PDCs yet, the latter do not have a public character in the eyes of judiciary.
It is well known that at the time of privatization [2002] assets/properties, equipment, infrastructure and land worth thousands of crores were given to PDCs for running the operations. Subsequently, also substantial sums of public money were pumped in. How could then, the court argue that no public interest is involved and hence, no case for CAG scrutiny?
A potent indicator of public interest is inextricable link between financial irregularities and power tariff. The former which invariably takes the form of cost padding has the inevitable effect of increasing the latter thereby impacting millions of consumers. Therefore, an audit by CAG is very much justified. Yet, DHC refused to see any connection and took a very pedestrian view seeing DERC to be the sole authority on matters related to tariff.
In a nut-shell, the DHC verdict has foreclosed any movement forward in taking action on the irregularities. Until this order is reversed by the Supreme Court [SC], there cannot be any advance. For now, CAG has filed a petition in SC challenging the order of DHC and seeking the apex court’s attestation to its jurisdiction to audit the PDCs. Whether or not Delhi HC’s order is quashed, only time will tell.
If, the SC refuses to quash and goes along with DHC, then, PDCs would have got away with their wrongs burying forever chances of any relief for Delhiites. Even if it upholds jurisdiction of CAG to conduct audit then also, one is not sure how much longer [already, more than 5 years have passed since irregularities surfaced] they will have to wait for relief to actually reach their door-steps.
The wrong doings in Delhi power supply and distribution systems have come in public glare primarily due to high voltage actions of crusader against corruption turned CM who is now pursuing things with alacrity [in other states, these would remain buried under the carpet for generations]. Yet, we don’t see credible action happening on the ground, courtesy obstructionist role of courts!
Unless the judiciary gets unshackled and government’s machinery too [primarily its legal bureaucracy] goes in to overdrive mode responding to public sensitivities, we will hardly see any positive outcome on this turf, notwithstanding oft repeated phrase of Modiji “naa khaaonga, naa khaane doonga”.