BW Communities

Power-ful Pain

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[There is no rest for the virtuous either, it appears. Not too long after its inquiries into the questionable basis of the 2G spectrum allocation by then telecommunications minister A. Raja, the Comptroller and Auditor General (CAG) is now enquiring into the allocation and award of ultra-mega power projects (UMPPs, of 4,000 MW each) by the power ministry, raising the possibility of another storm over financial and regulatory propriety. Members of the political opposition and news media have been quick to ask if another scam will emerge that could take Anna Hazare back on the road to New Delhi once again. For the government the spectre of allegation of another scam, will convert current political headaches into a severe migraine attack. Finance minister Pranab Mukherjee acknowledges that the CAG is simply fulfilling its mandate; but he also underscored care to ensure the existence of "malafide intent as distinct from bonafide errors of judgement or divergent opinions on policy options". He was speaking at an event marking the CAG's 150 years. Predictably, power ministry officials are livid at the suggestion that rules were flouted in awarding UMPP projects. "There can be no fixed rule for implementing such policy," says a senior official in the ministry. "When in doubt about the policy intent, we went to an empowered group of ministers (EGoM) for advice." "Each contract was transparent and policy aspects were vetted by the EGoM," a former official of Power Finance Corporation (PFC) says. PFC was the nodal agency for awarding UMPPs in 2007, creating special purpose vehicles for the four UMPPs identified. (Later, the number of projects went up to 16.) <img src="/businessworld/system/files/PRIVATE-LOSS_298x216.jpg" style="float: right; margin: 10px;" width="298" height="216">The central question in the 2G telecom spectrum allocation scandal was the presumptive loss to the public exchequer of Rs 1.76 lakh crore, a gigantic number. Will there be a similar calculation of presumptive loss to the government? And on what basis will that be determined? At least four of the UMPPs are expected to begin generating power by 2012, and this controversy might derail the process. The CAG may ask whether there were any performance contracts, and which specified penalties that would be levied for non-performance. Readers may recall that Reliance Power was awarded the Sasan UMPP after the original successful bidders Lanco Infratech and Globeleq Singapore were disqualified for misrepresenting financial parameters in their proposal. Lanco was fined Rs 1 crore, instead of forfeiting the bid bond of Rs 120 crore. The CAG could ask why the government allowed that. Officials in the PFC say it was a policy decision taken by the EGoM. Can the CAG question a policy decision? Critics could argue that this is not a policy audit. In his speech, the finance minister said the CAG needed strengthening: if that is political will, what will the way be? (This story was published in Businessworld Issue Dated 28-11-2011)