The Maharashtra government on 26-07-2016 said that the Comptroller and Auditor General (CAG) would carry out an audit of private power distribution companies (discoms) Tata Power Ltd and Reliance Infrastructure Ltd which supply electricity in Mumbai.
Maharashtra energy minister Chandrashekhar Bawankule made this announcement in the legislative assembly. He said instructions for the CAG audit of these two private power utilities would be issued on 27-07-2016.
The Bharatiya Janata Party (BJP) Mumbai unit president and legislator, Ashish Shelar, had made the demand.
In Greater Mumbai, four power utilities supply power. The state-owned Brihanmumbai Electric Supply and Transport (BEST) undertaking caters to more than 1 million consumers; Reliance Group's Reliance Infrastructure has a consumer base of around 2.9 million and Tata Power distributes power to more than 500,000 consumers. The state-owned Maharashtra State Electricity Distribution Co. Ltd (MSEDCL) caters to less than 1 million consumers in the Mumbai suburbs of Bhandup, Mulund, and Kanjur.
However, being state-owned utilities, BEST and MSEDCL are subject to CAG audit.
The demand to open the two private entities to CAG audit has frequently been made by political parties. Speaking in the assembly on 26-07-2016, Shelar claimed that the two private power distribution companies deliberately raised their capital costs to show losses and raise tariff to recover costs.
"In Mumbai R-Infra and Tata Power charge the highest tariff yet their accounts are not open to CAG scrutiny. The consumers have no means to know the authenticity of their accounts and these two companies should be opened to CAG audit in the interest of transparency and accountability," Shelar said.
In 2014, the 45-day-long Aam Aadmi Party (AAP) government in Delhi was the first to order a CAG audit of three privately owned-and-run power discoms in Delhi: Reliance Group's BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd, and Tata Power Delhi Distribution Ltd. However, in December 2015, the Delhi High Court quashed the order upholding the plea made by the three power discoms that they did not come under the purview of CAG as they were private entities.
The discoms also stated that power tariff was determined by the electricity regulator and not the companies themselves. The Delhi government has challenged the HC decision in the Supreme Court. The apex court is yet to pass a final judgment on the matter.
When contacted, a spokesperson for Reliance Infra in Mumbai said, "R-Infra would not like to issue any statement on energy minister's statement."
A Tata Power spokesperson declined to comment.
Pratap Hogade, president of Maharashtra Electricity Consumers Association, welcomed the announcement but added that CAG audit was not enough.
"MSEDCL and another state owned utility Maharashtra Power Generation Co. are audited by CAG. But little action is taken on the CAG findings and recommendation. For instance, the CAG had pointed out irregularities and losses worth Rs8,000 crore in its audit of both MSEDCL and MahaGenco for the period 2005 and 2010. It made several recommendations to recover the loss and improve the performance of these utilities. But no action has ever been taken on those recommendations. The energy minister should tell as what action he has taken on those recommendations. That is why merely subjecting a power company to CAG audit is not enough," Hogade said.
Reliance Group companies have sued HT Media Ltd, Mint's publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.