 "Guj govt passed on Rs 587 cr undue benefit to Essar Power: CAG")
Gandhinagar: The state-run Gujarat UrjaVikas Nigam Ltd (GUVNL) passed on “undue benefit” of Rs 587.50crore to Essar Power by allowing it to change the deliverypoint of transmission of power to GETCO from its plant, a CAG report said.
The CAG report on the state-run Public SectorUndertakings (PSUs) was tabled in the Gujarat Assembly on thelast day of the Budget session today.The report said, “Fixing of delivery point subsequentof PPA (power purchase agreement) led to passing off unduebenefit to Essar Power Gujarat Ltd (EPGL) for Rs 587.50 croreduring the tenure of PPA.”
[caption id=“attachment_76454” align=“alignleft” width=“380”]  The Essar headquarters in Mumbai. Reuters[/caption]
The state-run GUVNL had signed a PPA with Essar in2007 to purchase 1,000 MW of power for 25 years. GUVNL transmits the power to grid with the help of another PSUGujarat Energy Transmission Corporation Ltd (GETCO), it said.Essar had agreed to transfer the electricity to a 220KV Substation in Vadinar, from where, GETCO would transmit thepower through its grid, it stated.
However, when GUVNL requested GETCO to evacuate powerfrom Vadinar substation, GETCO said that no such substationexisted at Wading, following which Essar agreed to set up a400 KV substation there.“The change of delivery point of electricity wasapproved in 2009. As a result of change in delivery pointafter signing the PPA, there was a saving of Rs 52 crore, asthey were not required to construct transmission lines,” thereport said.Essar saved additional Rs 21.42 crore per annum fornext 25 years on line losses, it added.
“As a result of bidder (Essar) quoting a deliverypoint and GUVNL accepting the same without consulting GETCO,there was an undue benefit to EPGL to the extent of Rs 587.50crore (Rs 21.42 crore per annum for 25 years plus Rs 52crore), during the tenure of PPA,” the CAG report said.
The CAG also pointed out several “irregularities” and"mismanagement" on the part of GUVNL, purchase of power at ahigh cost, deviation from standard bidding procedures, paymentof incentives in contravention to statutory notifications,loss due to non-adherence of provisions in PPA, award of solarpower projects to ineligible bidders and excess capacitycreation under solar power.
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