In its petition before the apex court, the Comptroller Auditor General (CAG) said that the three power distribution companies (discoms) in the national capital enjoyed funding of more than Rs 5,000 crore from the Delhi government since their inception in 2002. “Considering that the discoms enjoyed funding of more than Rs 5,000 crore from the state by way of equity, debt, transferred assets and also receivables, there is a nexus with the consolidated fund of the state, and hence, the CAG has a statutory duty to scrutinise the books of accounts of discoms,” the CAG said. The petition went on to say that “there were huge discrepancies in their (discoms) accounts” and the Delhi government’s decision in seeking an audit of their books was justified. Since the Delhi government holds a 49 percent stake and has given funds over Rs 5,000 crore, there is no doubt that their accounts should be audited by the CAG. To the uninitiated, the three discoms—Anil Ambani’s ADAG-owned BRPL and BYPL and the Tata-owned NDPL—are all joint ventures with the Delhi government. In each of the discoms, the Delhi government has 49 percent stake while the private entities have 51 percent each. Last month, the Delhi High Court had quashed the Aam Aadmi Party government’s decision to get the accounts of three private power distribution companies (discoms) audited by CAG. The matter is now before the apex court. The Delhi government’s demand was rejected by the High Court due to “procedural lapses”. The discoms had challenged the Delhi government’s audit directive, contending that the office of CAG was not empowered to scrutinise the accounts of private firms under Section 20 of the CAG Act.
In September 2015, a leading English newspaper had published the findings of a CAG draft report that reviewed the accounts of the three discoms. Front page headlines across newspapers had told us that the three discoms had inflated their dues by 8000 crores. The residents of Delhi are acutely aware of how rising electricity bills have affected their monthly budgets in the past decade. Every year, they have been told by “experts” that ordinary citizens do not understand the complexities and rising costs of power generation and pricing, and how their demands of lower electricity tariffs are unreasonable and populist. However, the CAG report had made it clear that the rise on power tariffs was not due to the legitimate demands of power generation and distribution, but due to discoms buying costly power, gold-plating costs, suppressing revenue, giving contracts to their own sister companies at unreasonably high rates and manipulating consumer figures. The audit also found that consumers have been made to pay for a large number of meters that were not even installed. In fact, the CAG draft report may have been singularly responsible for the Delhi Electricity Regulatory Commission (DERC)’s decision to reject the 18-21 percent hike in electricity rates, as demanded by the discoms.
Among other findings, the DERC claimed that it discovered an estimated profit of Rs 453 crore by three discoms in the city against the Rs 2,202 crore financial loss claimed by them in 2015-16. Moreover, the DERC had also pulled up discoms for purchasing costly power from various power stations without its prior approval and claimed that an audit of these records will further reduce the estimated loss of over Rs 12,000 claimed by discoms. Coming back to the CAG, it said that there is a significant scope for reducing tariffs in the city. The national auditor had raised several pertinent questions on the lack of transparency and egregious instances of conflict of interest within the three power discoms. It was the 49-day-old AAP government, which had initially ordered the special CAG audit of the discoms.