SHILLONG: The financial management of MeECL and its subsidiaries is plagued by absence of administrative and financial autonomy to manage their individual revenues and expenditures.
This was revealed in the report of the CAG for 2017-18 tabled in the Assembly on Thursday.
As part of the power sector reforms, the erstwhile Meghalaya State Electricity Board was unbundled in March 2010 into four companies, Meghalaya Energy Corporation Limited (MeECL), the holding company and its three subsidiaries, Meghalaya Power Generation Corporation Limited (MePGCL), Meghalaya Power Transmission Corporation Limited (MePTCL) and Meghalaya Power Distribution Corporation Limited (MePDCL).
The performance audit was conducted to review the financial management of MeECL and its three subsidiaries covering the aspects relating to planning, revenue generation, borrowing and debt servicing activities during the period from 2012-13 to 2016-17.
According to the CAG report, the revenue generation by MePDCL, which is the main revenue earning subsidiary of MeECL, was inadequate due to high power purchase costs and poor billing and collection efficiency.
The technical and commercial losses stood at around 35 percent during 2016-17.
The revenue realised from sale of power during the five years 2012-17 was not sufficient to meet even the power purchase cost (including transmission/wheeling charges).
“Poor servicing of debts and excessive dependence on borrowings from financial institutions placed them in a debt trap situation,” the report said.
MeECL defaulted repayment in about 86 per cent of the loan instalment during 2012-17 leading to high incidence of additional interest and penal charges.
“Lack of effective budgetary planning and control further worsened the financial conditions of MeECL,” the report said.
MeECL and its subsidiaries utilised only about 16 percent of the available financial resources on creation of fixed assets during the audit period. Reluctance of the state to release committed subsidies annually (accrued to Rs 798.39 crore) had also aggravated the operational performance of MeECL and subsidiaries.
“The internal control and monitoring mechanism prevailing in MeECL and subsidiaries was found lacking. There was no appropriate system in place for periodical review and monitoring of important operational areas at top management level,” the report said.
