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CAG raps Power Grid for inadequacies in pricing methodology in telecom biz

CAG rapped Power Grid for lack of transparency in offering discounts for its telecom business

Topics
Cag  |  Electricity In India  |  Powergrid

Press Trust of India  |  New Delhi 

Trai predatory pricing, TRAI, RELIANCE JIO, PREDATORY PRICING, TELECOM SECTOR,Telecom Regulatory Authority of India ,Cellular Operators Association of India , COAI, bharti airtel, idea cellular, vodafone,Telecom Disputes Settlement and Appellate Trib
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The (CAG) on Tuesday rapped state-run transmission utility Corporation for inadequacies in pricing methodology followed by it and lack of transparency in offering discounts for its business.

"Diversification into business by the Company was commendable and enabled the company to operate in two important service areas viz. Power and However Audit noticed that PGCIL could not achieve the projected market share in telecom business and though the business has been earning profits since 2009-10, it is yet to achieve payback which was anticipated by 2007," the said in its report tabled in Parliament today.

The observed, "There were inadequacies in the pricing methodology followed by the Company. The multiplication factor adopted to scale up tariff for higher capacities was low, which adversely impacted revenue. Pricing of Indefeasible Right to Use (IRU) contracts was inconsistent with different methods applied for different contracts, leading to lower revenue for the business."

"The discounts offered by the Company on ceiling tariff were neither transparent nor non-discriminatory. Shortcomings were noticed in sharing of revenue with State transmission utilities for using transmission assets for telecom business. The financial impact of observations worked out to Rs 412.88 crore (Rs 399.48 crore related to pricing methodology and Rs 13.40 crore related to sharing of income and allowance of downtime credit)."


The recommended, "The Company may review the multiplication factor for scaling up bandwidth price in line with the TRAI notification. The Company may also frame a uniform pricing methodology for IRU contracts. Transparent criteria for offering discounts to customers may be instituted and uniformly implemented.

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First Published: Wed, August 08 2018. 00:11 IST
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