Maharashtra govt to seek legal opinion on CAG audit of discoms

Ruling and opposition parties have made a strong case for CAG audit of Tata Power and R-Infra citing they are making huge profits by charging high tariffs

The Maharashtra government will seek legal opinion on whether it can order a Comptroller & Auditor General (CAG) audit of private distribution companies in Greater Mumbai.

Chief Minister Prithviraj Chavan told Business Standard: “The government will consider the audit of Mumbai distribution companies only after seeking legal opinion. The issue will be taken up at the Cabinet meeting.”

The state Cabinet, slated to meet on Wednesday, is expected to discuss the audit of Tata Power and Reliance Infrastructure and look into various options to reduce power rates, as demanded by the ruling Congress and the Opposition Shiv Sena, besides a couple of citizen organisations. Both the Congress and the Shiv Sena have batted for a CAG audit of the two power distribution companies, saying these were making huge profits by charging high rates.

The government will also study a report by the Administrative Staff College of India (ASCI) on Reliance Infrastructure. Following public discontent over the steep increase in electricity rates, the state government had, in 2008-09, asked the Maharashtra Electricity Regulatory Commission to probe the details Reliance Infrastructure’s operations. The investigation was related to power purchase, capital expenditure, physical verification of assets and books of accounts and verification of vouchers for the period between FY04 and FY09.

In its report, ASCI didn’t state any adverse findings.

On condition of anonymity, a senior state minister said the government would examine section 20 of the CAG Act, 1971, which related to the audit of accounts of authorities or bodies that weren’t otherwise subject to CAG audits.

According to section 20, “The Comptroller and Auditor General may propose to the president or the governor of a state or the administrator of a Union territory having a Legislative Assembly, as the case may be, that he may be authorised to undertake the audit of accounts of any body or authority, the audit of the account of which has not been entrusted to him by law, if he is of the opinion that such an audit is necessary because a substantial amount has been invested.”