DVC’s delay in implementing projects resulted in Rs 3,078 crore cost overrun: CAG

The Government auditor found an overall cost overrun of the 4,700 MW of the 11th Plan projects to be at Rs 7,311 crore of which Rs 3,078 crore was on account of delays.

In a report on the capacity addition in power generation during 2007-2012 by Damodar Valley Corporation, the CAG found that the company was able to implement only 500 MW out of the 4,700 MW target for the 11th Plan period (2007-2012). This too was after a 17-month delay.

The report added that of the remaining 4,200 MW, 2,000 MW was implemented during April 2012 to March 2014 with delays of 21 months to 37 months. The remaining 2,200 MW was still being executed in March 2014.

On June 2014, DVC management in its reply indicated the cost over-run by comparing the actual and provisional cost with the revised project cost instead of original approved cost. “This is not tenable as the project cost was revised from time to time due to delay in execution and unrealistic assessment of various components of cost. The management, however, did not offer any comment on <g data-gr-id="33">unrealistic</g> assessment of various components of <g data-gr-id="34">project</g> cost as pointed out by <g data-gr-id="35">audit</g>,” CAG sources said.

It was also observed that the monitoring mechanism of the DVC was not effective as it did not yield desired result in removing the project impediments. Even controllable factors like delay in handing over of access roads to contractors, issuance of construction drawings etc. were not addressed to in time to contain project delays.

Also, nearly 39 percent (975 MW) of the capacity of new units commissioned and 33 percent (725 MW) of the capacity of upcoming units under 11th Plan project could not be allocated to the prospective consumers resulting in surplus power

On the context of loss of additional return on equity, none of power projects earmarked for execution during the 11th plan period were commissioned within the specified timeline resulting in loss of opportunity to earn additional return on equity of Rs. 1011.73 crore.