HC quashes AAP bid to get CAG audit of discoms

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New Delhi | Published: October 31, 2015 12:29:53 AM

In a major setback to the AAP government, a two-member bench of Delhi High Court on Friday quashed the Delhi government's directive to get the Comptroller and Auditor General...

In a major setback to the AAP government, a two-member bench of Delhi High Court on Friday quashed the Delhi government’s directive to get the Comptroller and Auditor General (CAG) to audit three privately-held electricity distribution companies (discoms) operating in the national capital territory of Delhi as it failed to serve any public

The court set aside the audit process conducted so far and also said that the draft audit report prepared by the CAG would have no bearing anymore. The HC also observed that such an audit would be a futile exercise as tariff determination was the sole domain of Delhi Electricity Regulatory Authority (DERC), which would not be influenced by any findings in the CAG’s audit report.

Responding to the HC order, chief minister Arvind Kejriwal said that the HC order was a “temporary setback” for the people of the national capital and he is “committed” to provide cheap electricity to people. “(The) Delhi government will soon file an appeal in SC,” Kejriwal said.

The discoms · Tata Power Delhi Distribution Ltd (TPDDL) and Anil Ambani-promoted BSES Rajdhani Power and BSES Yamuna Power · had challenged the AAP government’s 2014 decision ordering a CAG audit of their accounts. The discoms further challenged the order of a single judge of the high court that had refused to stall the CAG audit.

After the government-owned distribution was privatised in 2002, the private entities have held majority stake of 51% in the discoms while the government is a minority shareholder with 49% ownership.

While issuing the directive for CAG audit on discoms, the Kejriwal government had said that it was not trying to stop or interfere in discoms’ functioning but was only trying to bring them under public audit, as 49% stake in the discoms was held by the Delhi government which has also infused capital in these companies.

The discoms, in their annual tariff revision petition to DERC, have consistently sought double digit tariff hikes to liquidate the “regulatory assets” that have piled up  to  Rs 30,000 crore  for the three discoms. For five years after privatisation of distribution, there was no tariff revision for the discoms, which, the dicosms claim, is the reason for the accumulated regulatory assets. In the order, the HC also observed that while CAG had no place in a regulatory regime governing the affairs of the discoms, the reforms sought by the government could be brought about through DERC itself.

While the CAG had agreed to audit the discoms on the direction of the Kejriwal-government, they had declined to do so in 2002 on the request of discoms soon after they had taken over from the Delhi Vidyut Board (DVB).

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