REC cuts state demand for grid upgrades from ₹44,821.22 crore to ₹12,412.55 crore

The audit covered projects sanctioned up to March 2020, with observations updated through December 2023.

Who it concerns: Union Government, Ministry of Power, and the 27 States and 3 Union Territories involved in the schemes.

What the auditor found

• REC restricted the System Strengthening component cost demanded by states from ₹44,821.22 crore to ₹12,412.55 crore, a reduction ranging from 14.13% to 99.05%.
• Feeder separation costs demanded by seven states (₹11,285.78 crore) were restricted to ₹3,967.20 crore, a reduction of 46.27% to 100%.
• AT&C loss targets were not fully achieved in 12 States and one UT, resulting in a lesser grant release of ₹3,631.62 crore to DISCOMs.
• Only 7,833 agricultural feeders were separated by March 2022, against 9,019 sanctioned and 16,500 approved by the CCEA.
• REC released ₹541.56 crore as first instalments to six states 13 to 360 days before the execution of required agreements.
• Early payment of ₹1,603.81 crore (60% of eligible grant) was made to six states without ensuring timely state contribution.
• Under RGGVY, REC released ₹246.28 crore in capital subsidy during 2014-15, while project works were not awarded until April 2015 to May 2017.
• Delays in award occurred in 494 projects (81.65%) out of 605, with 184 projects delayed by more than 12 months.
• Delays in completion occurred in 555 projects (91.74%) out of 605, with 263 projects delayed by more than 24 months.
• CAG recommended that the Ministry of Power ensure feasibility studies and detailed field surveys before preparing Detailed Project Reports (DPRs) to minimize variations.
• CAG recommended standardizing procedures for project award and execution to ensure timely completion.

Also in the document

• The audit found that the allocated budget for system strengthening and feeder separation was insufficient to meet the scheme's objectives, leading to significant restrictions on state demands.
• A large majority of projects (over 80% for award and over 90% for completion) experienced delays beyond the stipulated timelines.
• Funds were released in violation of guidelines, including payments made before the execution of necessary agreements or before project award.