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Experts smell a rat in govt ‘no’ to CAG audit of discoms

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Reported by Chinmaya Dehury

Bhubaneswar, Jan 6:

With the Delhi High Court today upholding the right of the Comptroller and Auditor General (CAG) to audit the accounts of private telecom companies, the fig leaf that private companies cited in defence of their right not to submit to a CAG audit is now gone. But for reasons best known to itself, the Odisha government has been stubbornly resisting the demand for a CAG audit of power distribution companies (discoms).power lines

Two days ago, when asked if the Odisha government would follow in the footsteps of the Delhi government and order a CAG audit of discoms, Energy minister Arun Sahoo had said an emphatic ‘No’. “We are not obliged to emulate what other state governments are doing. In any case, the state government is doing performance audit of the power utilities periodically,” he had said.

Discoms, it may be noted, have been claiming steep aggregate technical & commercial (AT & C) losses touching nearly 40%.

Experts in the power sector smell a rat in the government’s blunt refusal to subject discoms to a CAG audit. “There is every reason to believe that the power utilities are concealing or misrepresenting facts about their AT & C losses,” said an expert in power sector reforms.

Forget allowing a full-fledged audit of their books, the state government has refused to provide information about the annual accounts and annual reports of discoms between 2008-09 and 2012-13 sought by the Accountant General (AG), Odisha as part of its thematic audit on ‘Distribution Sector and AT&C loss’. Besides the annual accounts, the office of the AG had also sought information on agenda papers and minutes of meetings of the board of directors of the discoms for the same period and monitoring activities of the Energy department in respect of these companies.

The AG, Odisha had asked the state government for the information after the discoms did not respond to its letter of June 18, 2013 in this regard.

In defence of its decision not to part with the information, it has said that there was no need for an audit by the CAG since their performance audit is carried out by the government at regular intervals, the same logic that the Energy minister used the other day.

While Energy secretary PK Jena declined to comment on the issue, experts in the field are of the view that there are ways to get the books of discoms audited by the CAG even if the government does not order such an inquiry. “The issue can be raised during the public hearing of the Odisha Electricity Regulatory Commission (OERC),” former OERC chairman DK Ray said. “Frankly, I don’t know why the government is not allowing an audit by CAG,” he said.

KC Badu, a former member of OERC, said that state government can allow an audit after getting the permission of Governor where public interest is concerned. However, the discoms have to be given an opportunity before an audit to be carried out by CAG.

As part of the reforms process, of which cutting down AT & C losses was a major objective, 51% of the shares of the now disbanded Odisha State Electricity Board (OSEB) were transferred to four distribution companies – Central Electricity Supply Utility of Odisha Ltd (Cesu), North Eastern Electricity Supply Company of Odisha Ltd (Nesco), Western Electricity Supply Company of Odisha Ltd (Wesco) and Southern Electricity Supply Company of Odisha Ltd (Southco). But clearly, the reforms have not had the desired result as evidenced by the still high losses on the count.

While Cesu is currently an OERC (Odisha Electricity Regulatory Commission) managed entity, Nesco, Wesco and Southco are controlled by Reliance Energy Ltd.