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Maha Govt's move to seek CAG audit of Tata Power, RInfra may be a non-starter

Sanjay Jog / Mumbai 27 Jul 16 | 07:13 PM

The Maharashtra government's move to seek a CAG audit of Mumbai distribution companies, Tata Power and Reliance Infrastructure, may hit a legal hurdle.

A section of the state energy department officials said AAP government's decision on CAG audit of BSES Yamuna Power Ltd, BSES Rajdhani Power Ltd and Tata Power Delhi Distribution Ltd in Delhi cannot be applied in Mumbai. This is because, in Delhi's case, the state government holds equity in three discoms while Tata Power and Reliance Infrastructure are private distribution utilities in Greater Mumbai without any government stake.

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The announcement about the proposed CAG audit was made on Tuesday by state energy minister Chandrashekhar Bawankule in the legislature ahead of the crucial election to the Shiv Sena-BJP controlled BrihanMumbai Municipal Corporation slated for 2017. Bawankule reacted to issue raised by BJP legislator Ashish Shelar about "inflated" tariff by two companies. So far no government notification has been issued.

Both Tata Power and Reliance Infrastructure declined to comment.

However, Maharashtra Electricity Regulatory Commission's former chairman V P Raja told Business Standard, "The Delhi situation is different from Mumbai. The Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Amendment Act, 1971 clearly says which are the organisations that can be audited. CAG can audit all govt organisations, along with those substantially funded by state or Central Government or to whom grant-in-aid is given by the government. Three Delhi discoms have government stake. However, in Maharashtra there is no government equity."

Raja observed that the government's move will be a non-starter and may not stand the scrutiny of the high court or the Supreme Court. He recalled that the matter with regard to CAG audit of Delhi discoms is coming up for hearing in the apex court.

Raja recalled that during his chairmanship of MERC, the state government in 2009 had issued directions under section 108 of the Electricity Act 2003 to look into the complaints with regard to costly power purchases by Reliance Infrastructure.

"I appointed the Administrative Staff College of India (ASCI) to examine. In its report, ASCI clearly noted that there was no hanky panky in Reliance Infrastructure accounts. However, I put a rider that Reliance Infrastructure could have done power purchase more rationally," he said.

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