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When CAG is at your door, negotiate

Aparna Kalra  |  New Delhi 

Chief executives of with the government always knew it was like sleeping with the enemy. But now, the fact has been brought home to them.

With seeking audits of several such companies by the Comptroller and Auditor General (CAG) (even though he quit as chief minister), heads of companies in such ventures are learning to negotiate.

Sanjiv N Sahai, a 1986 batch Indian Administrative Service officer, tries to hide his feelings but he is seething. He says he is glad his small company is being equated with the three Delhi power distribution companies. Sahai has replied to a notice of a audit of the (DIMTS), a venture between the Delhi government and IDFC Foundation. oversees a number of projects such as the bus cluster system and the bus rapid transit (BRT) corridor. (PARTNERING THE GOVERNMENT)

Sahai says his company doesn't own any assets; it oversees or manages contracts such as the one between the Delhi government and bus cluster owners, without owning the buses or the shelters.

Scope of audit

The company also manages the money involved in the bus cluster system. Sahai says as this money is public, it can be audited by CAG; but he objects to auditing projects that his company won on its own merit, not through the Delhi government.

The scope of the audit is also on the mind of Praveer Sinha, chief executive and executive director of Tata Power Delhi Distribution or (formerly NDPL), where CAG auditors moved in on January 27.

TPDDL, a venture between the Delhi government and Tata Power, distributes power to north and northwest Delhi and is one of the three distribution companies of which the Kejriwal government had sought audits. Though the company moved court to prevent the audit, it failed.

Now, with the auditors going through the company's books, Sinha has demanded he be informed of the audit's scope. "We will go for any audit that the law of the land requires. You need to discuss the scope and the period. They were not being transparent," he says, adding CAG hadn't discussed the scope of the audit.

He has sought a meeting this week.

Sahai of says, "I made my view very, very clear. We manage project funds for the government, which is public money. We say you ought to audit that… But the funds we generate from our own businesses, what is their locus standi on that? We are working in Ethiopia; the entire traffic signalling of Ahmedabad is in our hands; we are bringing a footprint, which was our mandate."

He adds CAG should not be mandated to audit those businesses.

The Kejriwal effect
Sahai put his views across at a meeting of the Delhi Cabinet, for which he was summoned, and later, in a written reply.

Chief executives are not celebrating Kejriwal's exit or his fire-and-brimstone style of governing.

TPDDL's Sinha, an electrical engineer in his second innings with the Tata group, says, "Do you see a single sheet of paper on my table? I am relaxed."

An auditor said it was completely feasible for the scope of a CAG audit to be defined in case of a private company in a joint venture with the government - which books would be audited and which wouldn't.

During the interview, Sinha's corporate communications head informs him Kejriwal has praised the Tata Power distribution company at a rally and the Supreme Court has restrained power supplier NTPC from cutting power to the two other Delhi discoms - Rajdhani Power and Yamuna Power, both Anil Ambani group units.

Reliance discom officials declined to be interviewed for this story.

Rajdhani Power and BSES Yamuna Power have bought time ahead of what seems like a collision course with the new chief minister. While the power discoms threatened to cut supply, Kejriwal said their licences might be cancelled and sought audits of all the three Delhi discoms.

The ties Delhi's joint venture companies share with the government are complicated. Power, water and bus public transport are subsidised for consumers. Though the populism is widely panned, it is continued by successive governments.

The Kejriwal government increased the subsidy on power and water. Recently, the BSES discoms cited low rates and a shortfall in revenue as factors behind their inability to pay power generator NTPC.

The Tata Power discom is confident by the end of this week, it will get subsidy of Rs 110 crore for two quarters - October-December 2013 (Rs 30 crore) and January-March 2014 (Rs 80 crore). The Reliance discoms' subsidy for the two quarters is estimated at Rs 220 crore.

The power companies hold Delhi Electricity Regulatory Commission responsible for not being able to realise recoverable regulatory assets or income due to them. This is because the regulator didn't raise power rates in the past.

Sahai says his company isn't a custodian of government assets but of government money. For instance, for Delhi's bus public transport system, collects Rs 15 crore a month as ticket revenue from carrying 1,000 people a bus a day (a chunk of its passengers are hold passes of Delhi Transport Corporation). It then adds a Rs 15-crore monthly subsidy and distributes this to the bus cluster owners.

The Delhi bus cluster system is managed by three private owners who own and run the buses; DIMTS responsible for fare collection. Sahai says CAG is welcome to audit kitties such as the Rs 350-crore one that DIMTS manages for bus clusters.

"The government needs to decide how to deal with these These are works in progress. What should be audited, what should not be, what is public money, what should be left to the discretion of the private sector - all these things need a deeper mechanism," he adds.

First Published: Sat, February 22 2014. 20:34 IST