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CAG raps MSEB over irregularities

July 23, 2003 10:48 IST

The Comptroller and Auditor General of India has pulled up the Maharashtra State Electricity Board for irregularities which resulted in a loss of Rs 1,111.35 crore (Rs 11.113 billion).

Injudiciousness, persistent irregularities and avoidable expenditure have resulted in the MSEB witnessing heavy losses, CAG mentioned in its report for 2001-2002.

The report was submitted to the Maharashtra legislature on Monday.

According to the report, MSEB failed to prepare completion certificates for 13,319 projects (valued at Rs 333.18 crore -- Rs 3.331 billion) of the total 52, 018 works (Rs 2,145.95 crore -- Rs 21.459 billion) commissioned by it.

This, the report says, was in addition to the 12, 157 earlier works (valued at Rs 474.57 crore -- Rs 4.745 billion) that have remained incomplete.

"This has resulted in an understatement of fixed assets and overstatement of capital work-in-progress by Rs 807.75 crore (Rs 8.077 billion) and consequent over capitalisation of interest, and under charging of depreciation (not quantified).

This was a failure on the part of the MSEB which required speedy issuance of work completion certificates," the report said.

These financial irregularities had been repeatedly pointed out to the MSEB by the CAG while auditing its accounts "but no corrective action had been taken by the public sector unit so far," the report said.

Another omission pointed out by the CAG pertains to the revenue from the sale of 679.2 mw of power valued at Rs 198.33 crore (Rs 1.983 billion) shown as 'received' from the Koyna Hydro Power station (stage four).

"This had not been handed over to the board till March 2001 and has resulted in overstatement of revenue and understatement of deficit, and current liability of Rs 198.33 crore," the report said.

Similarly, the liabilities on account of grade difference of coal did not include Rs 16.47 crore (Rs 164.7 million) worth of coal supplied to the Nasik Thermal Power Station, which was yet to be finalised.

"This fact was not brought out by way of note to the accounts," the report said.

The MSEB also came under fire for taking more than five months (of the six months validity period) for finalising tenders for the purchase of a conductor and allowing less than a month for clearance for this by the Central Electricity Authority and the World Bank.

"The delayed receipt of approval from the CEA and World Bank after the validity period led to the procurement of the conductor through another tender at an extra cost of Rs 27.31 crore (Rs 273.1 million)," the CAG report stated.

In another instance of the MSEB foregoing its own benefit, the report said: "The Bharat Heavy Electricals Ltd offered to pass on to the MSEB deemed export benefits of excise duty drawback and duty-free imports of high voltage direct current equipment. But unwarranted forego of such benefits while making the agreement led to a loss of Rs 1.73 crore (Rs 17.3 million)."

The CAG also points out that terminals costing Rs 1,342.95 crore (Rs 13.429 billion) remained idle for 12 months owing to a delay in completion of the HVDC line since the MSEB failed to supply the material in time to line contractors.

This resulted in a loss of an anticipated benefit of Rs 59.76 crore (Rs 597.6 million) envisaged on account of the reduction in transmission loss of power.

According to the report, the MSEB had already suffered a cost overrun of Rs 1,683.70 crore (Rs 16.837 billion) following a 92-month delay in the implementation of the HVDC project.