CAG cautions discoms against more fiscal problems

The uninterrupted 24×7 free power supply to the agriculture sector being implemented by the Telangana government since January 1, 2018, is likely to adversely affect the financial position of the two power distribution companies (discoms) further, the Comptroller and Auditor General report on State’s accounts for 2017-18 has observed. In its audit report for 2017-18, which was tabled in the Telangana Legislature on September 22, the CAG pointed out that even the nine-hour supply itself led to an additional burden of ₹894.43 crore in 2016-17 in Southern Discom alone as energy consumption by the sector exceeded the extent approved by the Electricity Regulatory Commission. “The enhanced supply of free power to the agriculture sector round the clock would affect the discom’s finances further,” the CAG observed in its report. The additional burden on the finances of the Northern Discom would be even more higher as two-thirds of the farm power connections in the State are in the areas covered by it. The financial position of the two discoms has been precarious even after they joined the Ujjawal Discom Assurance Yojana (UDAY) in January 2017. Of the ₹9,875 crore accumulated losses of the two discoms till March 31, 2015, the State government took over debt of ₹7,500 crore.

However, by the end of September 30 that year, the accumulated losses shot up to ₹11,897 crore, leaving, additionally, about ₹4,400 crore debt burden for the two discoms till September 30, 2015 itself. The CAG further faulted the State government for absorbing the discoms’ debt of ₹7,500 crore in the form of equity against 50% grant (reimbursement) and 25% each of loan and equity as suggested under the guidelines of the UDAY scheme. In spite of the additional grant of ₹7,200 crore provided by the State government during the last four years in addition to subsidy compensation to the two discoms, as stated by the managements of the power utilities recently, the CAG report pointed out that there was a shortfall of ₹268.6 crore in the release of subsidy by the government as of March 2017 in the case of Southern Discom alone. It has affected the working capital requirement of the discom and resulted in the additional burden of another ₹96 crore on it in the form of delayed payment surcharge paid to power producers.

With no tariff revision for the last few years, the additional annual burden of ₹1,600 crore in lieu of the cost of employees, and huge dues (over ₹9,000 crore) of energy charges by government departments and local bodies and the recently introduced letter of credit system for ensuring timely payments to power producers, the finances of the two discoms are set to take a further beating, as cautioned by the CAG, a senior executive of a power utility admitted on condition of anonymity.

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Printable version | Nov 27, 2020 2:11:10 AM | https://www.thehindu.com/news/cities/Hyderabad/cag-cautions-discoms-against-more-fiscal-problems/article29550676.ece

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