Will Odisha See More Power Tariff Hikes? GRIDCO & DISCOMS Are Bleeding Red!

Bhubaneswar: The power play in Odisha is in a piquant position. The question nagging every mind is what will happen to the State if the lone bulk power supply utility GRIDCO go bankrupt.

The fact of GRIDCO bleeding red and on the verge of bankruptcy has popped out in the audit report of CAG that was tabled yesterday in Odisha Assembly.

HOW BANKRUPTCY SWORD HANGS OVER GRIDCO?

The net worth of State Power transmission PSU GRIDCO Limited had fully eroded (Rs (-)3,853.75 crore). At the aggregate level, it is among the nine power PSUs that have accumulated losses to the tune of Rs 4,443.12 crore as against the capital investment of Rs 4,048.67 crore as of 31 March 2019.

WHAT’S THE WORRY:

” A negative net worth indicates that the entire investment by the owners has been wiped out by accumulated losses and deferred revenue expenditure,” the CAG report rued.

“If the entire investment gets wiped out by liabilities and losses then how can the power transmission infra in the State record a revival. This will lead to higher T & D (Transmission and Distribution), AT&C (aggregate technical and commercial) losses, which in turn will lead to an increase in power tariff every year or back to the dark ages,” opine experts in the power sector.

WHY MORE POWER TARIFF HIKE LOOMS LARGE?

The power consumers in the State have to worry a lot if the revelations of the CAG report are any indication. Not only GRIDCO, but the DISCOMs in the State are also in deep red. The CAG report finds that AT&C (aggregate technical and commercial) losses of DISCOMS in the State have risen to 74 per cent on 2018-19 from 50 per cent. The experts are of the view that high AT and C loss has been the main contributing factor behind steep hikes in power tariff.

THE BUCK STOPS WHERE?

If the CAG report is to be believed then the mess in the power sector is the ‘undoing of the State Energy Department. The power-play of omissions and commissions have been behind the trip down in the performance of GRIDCO and DISCOMS.

Sample the details below.

• ODSSP (Odisha Distribution System Strengthening Project) was conceived for implementation within the timeline of 2018-19 in order to reduce AT&C loss and to increase the supply of quality and reliable power to the consumers by up-gradation of distribution infrastructure.
• The project did not yield the desired result and was affected by delays due to inadequacies in project planning. Execution of the project suffered due to delayed handing over of sites and lack of coordination with the DISCOMs.
• In some instances, structural deficiencies like installation of higher capacity transformers (leading to improper load balancing), installation of defective transformers, usage of oversized conductors continued to potentially impact AT&C losses negatively instead of arresting them.
• Instances of unplanned and uneconomic procurement of materials led to larger financial outlay without the corresponding benefit for the attainment of the envisaged project objective.
• The CAG report, thus, has commented that this has led to a situation whereby even after spending 81 per cent of the project outlay, the physical progress of the project was 36 per cent (August 2019).

THE PLUG-OUT FACTORS

• Irregular award of tender and extension of undue benefit to the contractor in the procurement of conductors.
• OPTCL invited open tender (March 2017) under a two-part bidding system for procurement of 71 KMs ACSR Panthor and 1,015 KMs ACSR Zebra conductors.
• The tender inter alia stipulated that the quoted price would be variable as per the Indian Electrical and Electronics Manufacturers’ Association (IEEMA) price variation (PV) clause.
• The last date of submission of tender was 5 April 2017. The base date of quoted price was given as 06 March 2017 i.e., 30 days prior to the opening of the techno-commercial part of the tender.
• However, before evaluation of the price bids of techno-commercially qualified bidders, the Goods and Services Tax came into force on 1 July 2017.
• Hence, the techno-commercially qualified bidders were asked (September 2017) to submit the GST compliant price bid on or before 06 October 2017.
• Accordingly, as per price variation stipulations, OPTCL changed the base date to 6 September 2017 i.e., 30 days prior to the last date of submission of the GST compliant price bid to give effect to the price variation clause.
• The parties were required to mention either ‘Firm’ or ‘Variable’ only against the nature of price in the price bid wherein a variable nature of price implies that price was subject to change during the tender period.

CAG FINDS SHOCKERS

• Based on price bids received, a purchase order was placed on the L1 bidder on 17 February 2018 for a supply of 71 KMs of ACSR Panther conductor and 1,015 KMs of ACSR Zebra conductor at a price of Rs 26.29 crore.
• Due to such ‘irrational’ purchase bids, CAG says, ” Consequently, the applicability of price variation clause in deviation to tender condition resulted in an extension of undue benefit to the supplier and avoidable expenditure of Rs1.04 crore (Rs 39.13 – Rs 38.09 crore).