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BW Businessworld

Why Power Distribution Cos Must Come To Terms With CAG Audit

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The resistence being shown by Delhi’s three power distribution companies on getting their accounts audited by the Comptroller and Auditor General of India (CAG) is uncalled for. If anything, this audit will help them come out clean in public on their long pending issues with the Delhi Electricity Regulatory Authority (DERC).
The private sector companies aver that the government auditor has no right to audit their financial accounts. The same argument was made by Reliance Industries in case of KG-D6 basin and the telecom companies during the investigation of 2G spectrum scam. This simplistic interpreation of the law under which the CAG was established says that CAG can audit the accounts of only government sector companies, but in the era of Public Private Partnership and where the private sector firms are doing business using the assets of the government, the private sector companies will have to go through the scrutiny of the public auditor. The Supreme and the the High Court have manifested this in their rulings.
In its affidavit, the CAG has said that that out of 311 queries raised by it, 211 have been responded in full, 20 queries were partially answered. Tata Power Delhi on its part has said that owing to the voluminous nature of data of the pending requisitions, some amount of time is needed to compile and respond.
Reliance Infra owned BSES Rajdhani has said "We have been fully co-operating in the audit process and would continue to do so. We have already submitted complete information on 306 queries, spread over 20,000 pages. Auditors have also been provided viewing rights on our entire data base.
While there could be some merit in the time taken by Delhi’s distribution companies in providing their details, it is a well known fact that even the ministry of coal played the same tactic during the CBI investigations on the coal scam and the court will sooner or later take cognizance of this fact.
Delaying the result of the ongoing audit could be a good tactic in the hope that a favourable government comes to power in Delhi and uses its clout to subdue the auditing process of the Delhi discoms’ financials. But, if the companies have clean accounts by cooperating with the CAG, they will actually be able to resolve the issue of Rs 27,000 crore of dues that the DERC owes to them collectively.