power purchase deficit at Rs 14,871 cr in 2012-17 in J&k

The CAG”s performance audit of power purchase agreements and electric revenue collection for 2012-13 to 2016-17 has brought out deficiencies in Jammu and Kashmir Power Development Department (JKPDD). The CAG in its report has flagged shortcomings in power purchase planning, signing and operationalisation of power purchase agreements, and collection of revenue. Besides, it also pointed out financial mismanagement and weakness in internal control.
J&K suffered a power purchase deficit of Rs 14,871 crore during 2012-17. As against an expenditure of Rs 24,299 crore incurred on power purchase during 2012-17, revenue realization from the sale of power was only Rs 9,428 crore, the Comptroller and Auditor General of India (CAG) said in its report on ”Social, General, Economic (Non-PSUs) Sectors” for the year ended 31 March 2017.
“The department (PDD) failed to meet its power requirement and the gap between unrestricted demand and self-generation available to the state ranged between 77 per cent and 84 per cent
“Around 73 per cent to 76 per cent of the power requirement of the state was met through purchase from Central Generating Stations,” the report, tabled in the Parliament this week.
It said JKPDD incurred an extra expenditure of Rs 840 crore on powers purchased during 2012-17 due to deficiencies in planning and non-optimization of the power purchase cost.
“The JKPDD made an avoidable payment of Rs 1,420.26 crore towards late payment surcharge and lost the opportunity to avail rebate of Rs 297.92 crore due to deficient financial management. It also had to shell out Rs 33.67 crore towards fixed charges without availing power due to imposition of regulation for delayed payment.
Due to non-completion of transmission infrastructure for evacuation of power, the report said, the department made an avoidable payment of Rs 543.47 crore towards idle capacity charges and energy charges on deemed generation to two power projects. Poor collection efficiency resulted in recoverable revenue of Rs 2,508.23 crore ending March 2017.JKPDD failed to recover its power purchase cost due to operational inefficiencies like the increasing gap between the average cost of supply and average billing rate, high aggregate technical and commercial losses, which were at 62.56 per cent in 2015-16 and increased to 67.63 per cent in 2016-17, which resulted in foregone revenue of Rs 10,176 crore.
The report said the department failed to implement revised tariff order approved by the Jammu and Kashmir State Electricity Regulatory Commission, resulting in loss of Rs 10.06 crore to the state exchequer.
“The department had not devised any mechanism for filing objections on petitions filed by the generators.
Meanwhile, the consolidated position of water usage charges assessed collected and the balance outstanding against all the 29 power projects in J&K was not available with the department responsible for assessment and collection.
“Only Rs 3,971.63 crore, 67 per cent of the assessed amount of Rs 5,950.55 crore in respect of 17 power projects had been recovered. Out of the total expenses of Rs 4,159.85 crore from the water usage charges fund, 2.40 per cent were allocated for the creation of assets, 80.25 per cent was used for the purchase of power.
“Purpose for which Rs 721.56 crore (17.35 per cent) had been transferred to the Common Pool Account, could not be ascertained,” the report said. It said the revenue from water usage charges had proved to be only an additional resource mobilization by J&K Government, especially for power purchase, and has not served the purpose of establishment and buying back of hydroelectric projects and for capital investments in transmission and distribution network.