The malady afflicting the power sector in Delhi is suggestive of a deeper mess in the country and calls for prompt action
During his first shot as the Chief Minister of Delhi, Mr Arvind Kejriwal promised that he would slash power tariff by 50 per cent. He did so, primarily on his conviction that the power distribution companies indulged in financial irregularities, leading to inflated cost of procurement and distribution, which were approved by a pliable Delhi Electricity Regulatory Commission.
A clear indication of how the DERC played to its masters tune (under the Sheila Dikshit Government) can be gauged from the fact that former DERC chairman approved 23 per cent reduction in tariff in 2010. After he was removed, his successor affected the hike upto 22 per cent in 2011 and a further 32 per cent in 2012.
For giving effect to the promised tariff cut, Mr Kejriwal’s plan was to nail these irregularities and recover excess sums that was allowed to the PDCs. So, immediately after taking charge, Mr Kejriwal announced audit of the PDCs by the Comptroller and Auditor-General, that had be completed on a fast track basis.
The PDCs, put up several obstacles, initially by objecting to the very jurisdiction of the CAG conducting such an audit (in this regard, they filed a writ petition in the Delhi High Court) and thereafter, non-cooperation via non-submission or delayed submission of the requested data.
In a draft report submitted by the CAG to the Delhi Government reveal that the PDCs in Delhi had inflated dues to be recovered from the consumers by almost Rs8,000 crore.
The CAG report also revealed an equivalent amount of ‘inflated’ regulatory assets (a euphemism for previously incurred losses that can be recovered from consumers if allowed by the regulatory authority).
This is bewildering, as currently, regulatory assets stand at around Rs28,000 crore, which threaten the hapless consumers with steep tariff hikes in the near future.
As on March 2013, the regulatory assets were about Rs19,500 crore. This amount included Rs12,500 crore as claimed by the PDCs, but was not scrutinised by the regulator.
Such huge sums of regulatory assets allowed to remain on the books for several years — without even scrutiny — points towards something much more than sheer inefficiency and lackadaisical attitude of the regulator.
It smacks of a well orchestrated game plan of the PDCs, acting in collusion with the DERC to let things linger on till such time when public interest dissipates giving latter an opportunity to surreptitiously allow a tariff hike.
Considering that a bulk of the regulatory assets have not even been scrutinised by the regulator, it can be safely inferred that the extent of inflation in regulatory assets will be far more than what was pointed out by the CAG.
This together with excess tariff already allowed will be a humongous amount well in excess of Rs20,000 crore on which, prompt action is required.
Both the Delhi Government and the Union Government must act in unison to ensure that the CAG report is expeditiously finalised and action areas identified to bring quick relief to the consumers.
Apart from cost padding, losses of the PDCs are also due to the large-scale theft of power in slums/jhuggiclusters as also in industrial areas. It is pathetic that honest consumers are made to pay for the free supply that is enjoyed by such dubious characters.
Ironically, those living in slums and jhuggis pay bribe to the local leaders and political big-wigs to ensure that they continue to have access to free supply. Even as corrupt politicians/local leaders/officials merrily add to their personal wealth, hapless consumer is burdened with ever increasing tariff. The Government needs to take tough action to countenance this menace.
The malady afflicting the power sector in Delhi is symptomatic of a deeper mess that a majority of the State electricity boards and PDCs are in all over the country.
Their balance sheets are bleeding because of ‘inflated’ cost of procurement and distribution, large-scale power theft (patronised by political establishment) and supplies to the farmers at artificially low tariff (even free, in some States). All put together, the SEBs/PDCs incur a cumulative loss of about Rs3,00,000 crore.
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