In its audit report for the year ended March 31, 2013, the Comptroller and Auditor General of India (CAG) has observed undue favours having been made to three of the top industrial houses by Gujarat government.

According to the CAG report tabled in the state assembly on Friday, the government had extended undue benefits, with combined value of over Rs 1,200 crore to Essar Power, Reliance Petroleum and Torrent Power.

In its performance audit on power purchase agreements (PPAs) with independent power producers (IPPs), the CAG observed that power distribution player, Gujarat Urja Vikas Nigam Limited (GUVNL) accepted change in delivery point without consulting the transmission player, Gujarat Energy Transmission Corporation (GETCO), “change in delivery point post signing of PPA led to passing of undue benefit to Essar Power Gujarat Ltd (EGPL) for Rs 587.50 crore during the tenure of PPA, which was signed in February 2007.”

The CAG further observed that following the change in delivery point without consulting transmission player, GETCO, EPGL saved Rs 52 crore as they did not require to construct the transmission line, also it saved Rs 21.42 crore per annum in terms of potential line losses. CAG also observed that Gujarat State Petronet Ltd’s (GSPL) decision to forgo Ship or Pay charges for the period from April 2012 to March 2013, based on the Essar Steel Ltd’s violated the terms of Gas Transmission Agreement (GTA) as well as resulted into undue benefit to ESL worth Rs 73 crore.

Further, in its performance audit for a period of 2008-09 to 2012-13 of the state-owned Gujarat Maritime Board (GMB), CAG pulled up the government for giving undue benefits to Reliance Petroleum Ltd (RPL) worth Rs 649.29 crore in terms of short recovery by erroneous calculation of set-off value and application of incorrect wharfage rate after the cost of captive jetty it constructed.

The CAG observed, "Undue benefit was extended to Reliance Petroleum Ltd (RPL) by non-recovery of full wharfage rate after the cost of captive jetty (Rs 362.01 crore) constructed by it was set-off. Further, erroneous calculation of set-off value and application of incorrect wharfage rate resulted in short recovery of Rs 649.29 crore from RPL." RPL has its captive jetty with two single buoy moorings (SBMs) at Sikka Port in Jamnagar.

Notably, last year too the CAG had found the state government’s gas transmission company, Gujarat State Petronet Limited (GSPL) passing on undue benefit of Rs 52.27 crore to Reliance Industries Ltd, the parent of RPL.

CAG also noted that GSPL’s decision with regard to the gas transmission agreement with Torrent Power Ltd (TPL) for its SUGEN power plant in Surat resulted into undue benefit to TPL worth Rs 18.64 crore.

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