CAG raps govt for waiving electricity duty of 3 firms

State recommended Rs 720 crore duty waiver

The office of the Comptroller & Auditor General of India (CAG) has pointed a finger at the Odisha industries department for incorrect determination of eligibility of three firms for availing electricity duty exemption under Industrial Policy Resolution (IPR) - 2001

In its draft note, the central auditor held that captive power plants (CPPs) of three companies — Vedanta Aluminium Ltd - VAL (Jharsuguda), Bhushan Power & Steel Ltd-BPSL (Sambalpur) and Action Ispat and Power Ltd (Jharsuguda) — were recommended for electricity duty (ED) exemption valued at Rs 720.36 crore.

Referring to VAL case, the audit observed that the expanded capacity of its CPP wherein four units of 135 Mw each were added, approval for expansion was given by the state government after the effective period of IPR-2001 (December 3, 2001 to March 16, 2007) and hence these units were not eligible for ED exemption.

We further observed from the initial inspection reports issued by the engineer-in-chief cum principal chief electrical inspector, Bhubaneswar, that the year of manufacture of the imported generators and generator transformers for CPP units VI and IX was 2008.

The year of manufacture of generator and generator transformers for Unit VII was September, 2007, and October, 2007, respectively. This indicated that the plant and machinery for these units had been procured and installed at the site after the effective period of IPR-2001.

The recommendation for the expanded capacity CPPs of 540 Mw was thus not in order leading to grant of ED exemption against ineligible units for 540 Mw,” D Mallick, senior audit officer (CAG audit) said in the draft note. According to audit’s calculation, ED exemption for VAL’s CPP was assessed at Rs 583.20 crore by the industries department.

As per IPR-2001, CPPs are entitled to ED exemption payable for a period of five years from the date of commissioning of the plant provided that no such exemption from the payment of ED is available in respect of power sold or supplied to the users other than the industrial units to which the power plant is captive.

Similarly, ED exemption worth Rs 114.48 crore for one CPP units of BPSL of 106 Mw capacity was also inappropriately determined, the audit pointed out. In this case also, the order for plant and machinery and their installation at the project site was done after the effective period of IPR-2001.

Another steel firm — Action Ispat & Power Ltd was unduly recommended for ED waiver valued at Rs 22.68 crore for its 21 Mw CPP unit.