Delhi Govt orders CAG scrutiny of private power distribution companies
New Delhi, July 3: The Delhi government has asked the Comptroller and Auditor General (CAG) to conduct an audit of the capital’s private power distribution companies against the backdrop of issues related to non-recovery of regulatory assets estimated to be around Rs 38,500 crore.
Regulatory assets (RAs) are deferred costs incurred by power distribution companies due to fluctuations in fuel prices. They represent the difference between the average cost of supplying electricity and the revenue discoms recover through consumer tariffs and government subsidies.
According to an order issued by the Power Department of Delhi Government, the CAG will carry out a comprehensive and rigorous audit to examine why the city’s three power discoms — BRPL, BYPL and Tata Power Delhi Distribution (TPDDL) — have continued operating without recovering the mounting regulatory assets.
BRPL (BSES Rajdhani Power Limited) and BYPL (BSES Power Yamuna Limited) are owned by Anil Ambani-led Reliance Power company.
The Power Department order states that the audit should ideally be completed within three months of its communication, although the CAG may grant additional time depending on the scope and complexity of the exercise.
The decision comes after Delhi High Court on June 22 declined to intervene in the Delhi government’s decision to have the CAG audit the accounts of BRPL and BSES Yamuna Power Ltd (BYPL).
Dismissing a petition filed by the two power distribution companies, a vacation bench of Justice Tejas Karia observed that their challenge was premature at this stage.
This will mark the first CAG audit of Delhi’s electricity distribution companies since the sector was privatized in 2002.
An attempt earlier by then AAP government to subject the discoms to a CAG audit was blocked by the Delhi High Court in 2015.
The outstanding regulatory assets, estimated at ₹38,500 crore and owed to BRPL, BYPL and TPDDL, are reportedly recovered through a regulatory assets surcharge included in consumers’ electricity bills.
According to the order, the Delhi cabinet, at its June 29 meeting, approved a recommendation in the public interest for a “strict and intensive” CAG audit to examine why the power distribution companies have continued to carry these unrecovered regulatory assets.
The Power Department’s order authorising the audit has received the approval of the Lieutenant Governor of Delhi. (BVI)
