CAG can't audit Delhi power discoms, says high court

Major relief to Reliance Power and Tata Power

The Delhi high court has quashed the Aam Aadmi Party (AAP) government’s plea for an audit of power distribution companies (discoms) in the national capital by the comptroller and auditor general (CAG).

The court said the CAG couldn’t audit private companies; the three discoms operating in Delhi are privately-owned.

The Delhi government owns 49 per cent stake in the Reliance Power-promoted BSES Yamuna Power (BYPL), BSES Rajdhani Power (BRPL) and Tata Power Delhi Distribution (TPDDL).

The court said such an audit did not constitute public interest under section 20(1) of the CAG Act, as “determination of tariff rates is in the sole domain of the Delhi Electricity Regulatory Commission (DERC), which is well empowered to conduct this audit or have it conducted. The report of a CAG audit of discoms has no place in the regulatory regime brought about by the Electricity Act and the reforms Act”.

Chief Minister Arvind Kejriwal said the order was “a temporary setback” for the people. “The Delhi government will soon file an appeal in the Supreme Court. I am committed to providing cheap electricity to the people of Delhi. Our fight will continue,” he said on Twitter.

AAP, too, issued a statement “disagreeing” with the verdict. The party demanded the government appeal before the apex court.

The party said, “Discoms have indulged in large-scale loot since more than a decade” and as earlier findings had said so.

Alleging a “well organised corporate-political nexus” had enabled private discoms to “indulge in a mega financial scam the AAP stated it would continue to fight in this regard.

The court said “populist measures such as the terms of reference cannot be used to determine tariff. Thus, any reform that the government wants to introduce can only be brought about through the DERC”.

TPDDL said it had “all along acted in compliance with the law of the land”. “The power distribution in Delhi is a regulated business, with robust built-in checks and balances, monitored and audited by the DERC on a regular basis.”

In 2014, CAG started an audit, following a request from the Delhi government. Subsequently, BRPL and BYPL moved court, questioning the legality of such an audit.

In its pre-poll promises, AAP had said it would audit the discoms, as these entities were inflating costs. After it came to power in Delhi last year, the Kejriwal government asked CAG for an audit of the three companies.

The court also rapped the Delhi government, saying, “instead of strengthening the DERC, it had undertaken a misguided exercise by issuing a direction to the CAG to audit the accounts of discoms when the report of such an audit would not have any sanctity in law for achieving the desired result”.

A draft audit report by the CAG on the functioning of the three discoms had alleged inflation of dues and passing on “dead cost” of power to consumers, without supplying equivalent electricity.

The high court restricted the Delhi government from taking any action on the report. Now, it has stated the CAG report will have no bearing on the operations of the three discoms. “The directions for an audit of the discoms by CAG, when the report of the CAG cannot impact the tariff, would not serve any public interest,” the court said.
 

Reacting to the order, TPDDL said it was a public service utility and works in absolute transparent and open manner. It is accountable to the Regulatory Commission, the Government and its Consumers. 

NO TO AUDIT

• 2013: AAP had in its poll manifesto said it would get CAG to audit the three power discoms
   
• 2014: CAG begins audit
   
• August 2015: CAG audit report leaked to media
   
• October 2015: Delhi HC rejects Delhi government’s request for the CAG audit