Discoms in Madhya Pradesh accounted for more than 96% of the losses incurred by the state’s public sector units (PSUs) in FY2016, a report by the Comptroller and Auditor General of India (CAG) revealed. Total losses for Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company Ltd (MPMKVV), Madhya Pradesh Pashchim Kshetra Vidyut Vitaran Company Ltd (MPPKVV) and Madhya Pradesh Poorv Kshetra Vidyut Vitaran Company Ltd — the three discoms of the state — were more than R5,134 crore. Combined losses for 21 PSUs in the state stood at R5,321.92 crore.
The thrust of investment in PSUs in Madhya Pradesh was mainly in the power sector. From R30,239.74 crore in 2011-12, the amount had increased to R60,496.51 crore in 2015-16, which is more than 86% of the state’s total investment in PSUs. The sector which seems to have received the state’s investment favours recorded net losses of R4,994.09 crore. The CAG report cited several operational inefficiencies of the discoms. For example, the report said that since MPPKVV did not complete major works within scheduled time, it could not achieve the target of supplying 24 hours of power to rural households. It had failed to reduce transmission and distribution losses in many areas as well.
There were also instances where the discom had spent government funds for unintended purposes. Besides, there were issues related to quality control and monitoring. Also, substation constructions in the state experienced significant delays as MPPKVV had not ensured land availability before awarding contracts. Further, the company delayed the termination of contracts despite persistent failure of contractors, costing the company R29.65 crore. The Madhya Pradesh Power Generating Company (MPPGC) Ltd incurred an additional expenditure of R26.13 crore because it had awarded contract at higher rates and had not followed a transparent bidding procedure.
The operational weaknesses of the discoms come at a time when the central government is taking measures to turn discoms financially sustainable. To turnaround financially distressed discoms, Madhya Pradesh had joined the Ujwal discom assurance yojana (Uday) in August last year. Under Uday, it was thought that the operational benefits would ultimately get translated into lower tariff for end users. On the contrary, aggregate technical and commercial losses in the state have increased to 27.7%, 4 percentage points higher than what it was when it joined Uday.