MeECL suffered as two energy firms made hay
CMD again seeks independent probe into energy mismanagement
SHILLONG, April 7: The Chairman-cum-Managing Director of MeECL, Arunkumar Kembhavi has once again asked the state government to refer the case of alleged mismanagement in the Energy Management (EM) cell to an independent inquiry committee.
In a letter to the Power Department Secretary, he said that he had ordered an inquiry into the alleged violations of laid-down procedures in the cell.
The CMD observed that H. Jyrwa, Superintending Engineer (EM), had acted on his own volition upon receipt of proposals from the energy traders – Arunachal Pradesh Power Corporation Limited and Kreate Energy – and had issued the Letter of Intent (LoI) for power banking at his level without consulting his superiors or the undersigned.
“He has not even marked a copy to anyone besides SLDC, the motives for which are unknown. This is in complete violation of all established norms, office procedures regardless of the board’s authorisation to SE (EM),” the CMD said.
According to Kembhavi, it has been found out from the records that none of the proposals accepted by the SE (EM) are through calling tenders or expression of interest. There are many such traders in the energy market and proposals from only two have been accepted and have been issued the LoI, he added.
He also pointed out that Kreate Energy had inked a five-year contract in 2016 for power banking which expired in March 2021 and he had rejected the proposal for extension beyond five years when it was “proved beyond doubt” that power trading was much more beneficial to the corporation than power banking.
“In the last six months, because of the competition ensured by the undersigned between the two traders, the trading margin has come down to Rs 2.75 from Rs 3 giving a net benefit of 25 paise per unit which is substantial. By not ensuring competition the Energy Management has caused a huge amount of presumptive loss to the corporation in the last 10 years,” Kembhavi said in the letter.
He added that total power supplied by MePDCL to other utilities though traders under banking arrangement from the financial year 2015-16 till November 2020 was more than 1,700 million units.
If the same power had been sold on IEX in the respective years, the total revenue earned would have been more than Rs 450 crore as per the average IEX rates.
Kembhavi pointed out that Kreate Energy was involved in large-scale embezzlement with Uttarakhand Power Corporation Ltd (UPCL), adding the Director (Finance) of UPCL had written to the undersigned that MePDCL should adjust Rs 40 crore Kreate Energy owes UPCL from payments due to the trading firm. Three officials from UPCL are under suspension because of this incident.
“By trading with a company with such dubious credentials, Jyrwa has compromised the integrity of the corporation,” Kembhavi said.
When he came to know that LoIs have been issued to the two traders without his knowledge, Kembhavi said he had immediately called for the file and had the LoIs stopped.
However, Kreate Energy refused to comply with the termination of an already issued LoI and the same had to be converted into purchase order according to its “explicit wishes”.
But Kreate Energy has still not returned the power due to MePDCL for the power banked before that period (March and April 2021), Kembhavi said, adding that Meghalaya had to undergo massive regulation because of power shortage during this period which establishes the devious nature of the company in question.
“It has also been alleged that there is no clause of late payment surcharges in the agreement with Kreate Energy. Because of this, Kreate has hoarded crores of rupees which should have been credited to MePDCL’s account on the very next day of trading. Through independent sources, it has been found that because of the indiscreet and imprudent power trading arrangement with Arunachal Pradesh Power Corporation Limited and Kreate Energy for the last 10 years, the corporation has suffered a presumptive loss of around Rs 134 crore which could have been saved had there been proper planning. However, this needs citation and evidence,” he added.
The CMD also said records point to certain cement companies having been favoured with the lopsided agreement of power banking potentially causing the loss of crores of rupees to the corporation.
“Transmission charges accruable to MePTCL, which should have been borne by the cement companies, were actually passed on to the MePDCL because of omission of the clause in the agreement. This power banking has been discontinued by the undersigned immediately after noticing the lapses. The same cement companies have now agreed to purchase the deficit electricity from MePDCL at normal industry tariff and the surplus from captive power plants will be injected back to the MePDCL grid at Rs 1 per unit which is extremely beneficial to the corporation. This should be inquired (into) and people responsible for this lapse be identified and losses be recovered,” he said.
“It is my considered opinion that the internal inquiry is inadequate to go into such magnitude. Hence the case may be referred to an independent inquiry committee outside of MeECL or handed over to an investigative agency as deemed fit by the competent authorities,” Kembhavi said.