CAG unravels Rs.14,000 crore cost overruns in hydro projects

August 31st, 2012 - 8:46 pm ICT by IANS  

New Delhi, Aug 31 (IANS) Delays in implementing 16 hydro power projects by four state-run generators, including NHPC, resulted in cost overruns of more than Rs.14,700 crore, India’s official auditor said Friday.

The CAG reviewed NHPC, SJVN Ltd, THDC India and NEEPCO and said the delays in commissioning of projects had led to the opportunity loss of generating 26,282.97 million units of electricity annually.

“Delay in execution of 16 projects by four Central Public Sector Enterprises (CPSEs) resulted in revision of their initial approved cost of Rs 30,005 crore to Rs 44,712 crore,” the Comptroller and Auditor General (CAG) said in its audit report tabled in parliament Friday.

“In seven completed/ongoing projects, the cost overrun was in the range of 53 to 148 percent,” it said in the report, Capacity Expansion in Hydro Power Sector by CPSEs for the year ended March 2012.

The CAG also said the additional return on equity of
Rs.1,474.57 crore permissible under Central Electricity Regulatory Commission (CERC) Regulations, 2009, has also been foregone by the companies.

It said the power ministry did not follow instructions from the Prime Minister’s Office to form special purpose vehicles for awarding six hydro-power projects in Arunachal Pradesh.

“Despite specific directions (August 1999) from Prime Minister’s Office (PMO), MOP did not form Special Purpose Vehicle (SPV) for survey, investigation and implementation of the Siang and Subansiri multi purpose projects (six) in the Brahmaputra Basin in Arunachal Pradesh.”

The government allocated six projects in May 2000 to NHPC of which only one project, the 2,000 MW Subansiri Lower, is being executed by NHPC. Four of the other projects were allotted to private players by the state Government.

“The decision to move from SPV to NHPC and then to private developers delayed execution of projects,” it said.

“The private developers/joint ventures are still in the process of getting various clearances. Hence, the estimated benefit of generation of 6,600 mw electricity per annum, as per detailed project reports of four projects allotted to private developers/ joint ventures, has not been achieved.”

About capacity expansion in hydro-power sector, the CAG pointed out major deficiencies. “With better planning, coordination, adequate survey, investigations, coordination and monitoring, the central public sector enterprises could have achieved capacity addition closer to targets.”

The companies were able to achieve just 13 percent (1,550 MW) of targeted capacity additions by March 2012.
“Consequently, the plans had to be scaled down from 11,813 MW to 6,794 MW. Even the scaled down targets, which were almost 42 percent less than the original targets, could not be achieved,” CAG said.

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