Financial mismanagement led to power crisis in Meghalaya: CAG

Comptroller and Auditor General (CAG) has criticised the lack of prudent financial management and consequent non-payment of huge energy dues which resulted in power crisis and load shedding in Meghalaya.
This has also resulted in extra and avoidable cost of Rs 102.87 crore to the power corporation over the past five years, CAG said in its report tabled in the recently concluded Autumn Session of the State Assembly.
CAG also noted that ever since the power sector reforms in April 2010, the Meghalaya Energy Corporation Limited (MeECL) has been facing severe financial crisis especially due to non-payment of huge dues on account of power purchases mainly from the North Eastern Electric Power Corporation Limited (NEEPCO) which continued to supply 64 per cent of the state's total daily requirements of power.

In 2011-12, the quantity and cost of power purchased from NEEPCO was 509.49 MU at Rs 194.73 crore, 681.25 MU at Rs 218.55 crore in 2012-13 and 205.27 MU for Rs 130.71 crore in 2013-14, the CAG said.
If bill was not paid within the stipulated date agreed between the state, the Centre and Reserve Bank, the company would be liable to pay surcharge at the rate of 15 per cent per annum compounded quarterly (1.25 per cent monthly).
An audit observed that due to paucity of funds, the company was not regular in payment of energy charges to NEEPCO and was also defaulting in making payments over the years resulting in accumulation of dues of up to Rs 223.76 crore as on September 2012.

The total outstanding amount payable to NEEPCO as on March 2014 was Rs 378.93 crore including surcharge of Rs 103.87 crore on account of delayed/nonpayments, the CAG said.
Due to non-payment of dues, NEEPCO intimated in October 2012 that 100 per cent power regulation would be effected from November 15, 2012 as per the CERC Regulations 2010 forcing the state government to make part payments to avoid power cut penalties.
The CAG audit observed that the company had also not judiciously managed its funds requirement as it failed to ensure timely availability of adequate funds for its working capital.