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Power ministry fails to use Rs 4.5 billion despite cash crunch

Samyabrataray Goswami in Delhi

Caught in the chicken-first-or-egg syndrome, the power ministry has returned half of the Rs 9 billion worth of budgetary support after failing to use the funds on the projects they were meant for.

Though the money for the crucial projects was sanctioned in time, top officials at the power ministry say the funds could not be used because the Cabinet's clearance for the revised, escalated costs remained pending.

As charges and counter-charges are traded between the present and former power ministers over the issue, project costs soar and completion dates get extended. This is the first time in the ministry's history that such a large sum of sanctioned money has been returned.

Power ministry officials were pleasantly surprised last year when then finance minister Palaniappan Chidambaram acted swiftly on their request for additional funds. The finance ministry sanctioned Rs 9 billion to the power ministry to meet the "acute shortage of funds."

The allotted funds were earmarked for crucial power projects and transmission and distribution network-related expenses. On March 31, 1998, the power ministry returned Rs 4.5 billion to the finance ministry as it could not be spent on the projects.

Confirming the report, Power Minister P Rangarajan Kumaramangalam squarely blamed the United Front government for the fiasco. "I have also been told the money reached the power ministry only in January. By then it was too late to utilise the funds for the projects by March 31," the minister said.

However, technocrats at the ministry say the funds were available around April-May 1997. The money, they say, was returned since little progress was made on construction schedules for the concerned projects .

Interestingly, the names of the projects mentioned by the power ministry and the reason why the funds allotted to them remained unutilised do not match those provided by Dr Yogendra K Alagh, power minister in the United Front government. It was during Dr Alagh's tenure at the ministry that the alleged mismanagement of funds is said to have occurred.

Says Dr Alagh, "The money returned was earmarked for the Chimera 2 Hydel Power Project in Madhya Pradesh and for the setting up of a HVDC transmission link between the north-eastern and northern parts of the country through Biharsharif in central Bihar. The tenders called for both had been announced during my tenure and I had briefed the current power minister about it when he took charge. There were some environment and safety-related issues which also needed to be addressed. But the United Front government fell. So it was left to the next government to finish the task."

Power ministry officials, however, say that of the Rs 4.5 billion returned, Rs 1.5 billion was earmarked for the Tehri power project in Uttar Pradesh, Rs 1.25 billion for the Nathpa-Jhakri project in Himachal Pradesh and Rs 1.75 billion for the Dulhasti project in Jammu. All three are hydroelectric projects.

The officials blame environmentalist Sunderlal Bahuguna's movement against the Tehri Dam for the delay in the project and the subsequent non-utilisation of funds. But Rediff On The NeT learns the actual reason is quite different.

A little over a year ago, the Comptroller and Auditor General of India raised an audit objection about the funding of the project. Originally, the dam was to be funded by both the central and Uttar Pradesh governments in the ratio of 3:1. Since the UP government contributed only Rs 2.5 billion out of the Rs 15 billion spent on the project till date, the CAG raised an objection. Until the imbroglio is resolved, no further central funding can be provided for the project.

The 390 megawatt Dulhasti project has technical problems -- the hard rock formation has delayed construction -- besides cost escalation. Power ministry officials say a delay in the Cabinet's clearance for the revised costs is responsible for the non-utilisation of sanctioned funds on the Dulhasti and the 1,500 megawatt Nathpa-Jhakri projects.

"About Rs 3 billion has already been sent out of the Rs 4.337 billion sanctioned for the Nathpa-Jhakri project. But the additional funds could not be used because the escalated project cost estimated at Rs 7.9 billion awaited the United Front Cabinet's clearance," says a senior power ministry official.

"These projects have now got the necessary clearances," says Kumaramangalam, "and work is in progress."