Burden of Rs 473 cr on people due to excess purchase of solar power: CAG

Purchase of excess solar power under the Gujarat Solar Policy, 2009 by the state government has led to excess burden of Rs  473.20 crore on the power consumers of the state. This was observed by the Comptroller and Auditor General of India (CAG) in its report for year ending March 31, 2013, tabled in the Gujarat assembly today.

The central auditor also criticised Gujarat government for awarding solar projects to ‘ineligible bidders’ that did not even fulfill financial or technical criteria under the much talked about Gujarat Solar policy 2009.

As per the state’s solar policy the maximum solar power generation up to March 31, 2014 was 500 Mw, against which a capacity of 958 Mw was setup by the developers till November 2010. The state-run Gujarat Urja Vikas Nigam Ltd (GUVNL) had signed power purchase agreements (PPAs) with the developers on the directives of the Gujarat government. As per the government policy the quantum of power to be injected into the grid from renewable resources was to be a maximum of 10 per cent of the total procurement of power. Furthermore, Gujarat Electricity Regulatory Commission (GERC) had decided sub-limits for procurement of power from each renewable source like solar, wind and bio-mass, bagasse and others.

GERC had kept sub-limit for solar power at the bare minimum in view of its high fixed cost. “However, Gujarat government in disregard to this economical mix as proposed by GERC, had approved development of solar projects far in excess resulting in purchase of 1,139.92.92 Mus (million units) of solar power in 2012-13 against the stipulated 686.23 Mus,” the CAG observed.

“This excess purchase of 453.69 Mus led to excess burden of Rs  473.20 crore and consequently passing of the burden to consumers through increased average cost of power of the GUVNL,” the audit report stated.

With regard to award of solar power projects, the CAG observed that in 10 cases, “even though the project developers did not fulfill either financial/technical criteria or both the criteria, they were allocated solar capacity by GOG (government of Gujarat).” The auditor further found that in four out of the 10 cases the object clause of Memorandum of Association (MoA) of developer did not envisage power generation activity to be pursued by them.

While auditing other public sector undertakings (PSUs) of Gujarat the CAG observed that there was loss of revenue of Rs  73.70 crore by Gujarat State Petronet Ltd (GSPL) due to waiver of ship or pay charges in favour of Essar Steel Ltd (ESL). It observed that GSPL’s decision “to forgo ship or pay charges for the period of April 2012 to March 2013 based on request of ESL was violation of the terms of amended gas transmission agreement (GTA) of March 2010 but also provided undue benefit to ESL.”

GSPL also suffered a loss of Rs  18.64 crore because of imprudent decision to reduce contracted capacity of Torrent Power Ltd. In case of GSPC Gas Company Ltd the CAG observed that the state-run company  suffered loss of revenue of Rs  25.37 crore due to non-revision of selling price of gas as per the terms of the agreement entered with industrial customers.