Ensure Escoms reduce AT&C losses, CAG recommends to govt.

The Comptroller and Auditor-General of India which audited the Integrated Power Development Scheme (IPDS) in Karnataka has recommended that the State government ensure that the Electricity Supply Companies (Escoms) reduce the Aggregate Technical and Commercial (AT&C) losses as per the trajectory fixed by the Union Ministry of Power (MoP).

The CAG has also recommended ensuring timely release of subsidy for irrigation pumpsets as per metered consumption.

The CAG found that while the approved cost (including PMA charges of ₹6.87 crore) of the IPDS was ₹1,378.44 crore and the awarded cost was ₹1,721.19 crore., the Escoms incurred the actual expenditure of ₹ 1,489.33 crore (as of March 2023), i.e., Escoms incurred excess expenditure of ₹ 110.89 crore than the sanctioned cost in implementing the scheme, which included additional expenditure to the extent of ₹ 38.52 crore due to non-procurement of materials at Central Procurement Prices discovered by MoP.

It also pointed out that non-compliance of various requirements for securing additional grants resulted in loss of opportunity to receive additional grant of 15% of the project.

Better billing

At the same time, CAG acknowledged that the billing efficiency of Hescoms had generally improved during the scheme period contribution to reduction in billing losses.

The CAG found that while in August 2015, in-principle approval to DPRs of all five Escoms valued at ₹1,138.75 crore was granted and works were to be awarded within six months and completed within 24 months, Escoms took took 11 to 27 months to award works, leading to significant delays.

In the report it is mentioned that the Escoms awarded contracts in violation of KTPP Act and Rules by providing less time for submission of tenders, ranging from 15 days to 54 days against the stipulated minimum time of 60 days and by awarding works at high tender premiums exceeding the estimated cost by 5% to 34%.

CAG audit also recommended that the State government may ensure that Escoms may devise a suitable mechanism to issue tenders in time, to take up works without delay and to ensure completion of works in time to achieve the envisaged objectives.

Further Escoms may follow time frames as per KTPP Act and Rules to ensure adequate competition and to allow market discovery for most economical rates.

The Escoms may ensure that comprehensive feasibility surveys were conducted before project execution and may include conditions of standard bid documents in invitation to bids and ensure adherence to the same while executing works, the report said.