The Competition Commission of India has ordered a probe against REC Power Distribution Company for alleged misuse of dominant position in financing rural electrification schemes to distort or manipulate competition in the market for power project consultancy services.
The Commission has directed the Director-General to complete the investigation in 60 days.
REC Power Distribution Company is a wholly-owned subsidiary of Rural Electrification Corporation Ltd, a ‘navratna’ Central Public Sector Enterprise under the Power Ministry. A complaint received by the Commission alleged that there is a conflict of interest between REC Power Distribution Company and its parent company in implementing the Rajeev Gandhi Grameen Vidyutikaran Yojna (RGGVY).
It said REC Power Distribution allegedly leveraged its association with REC and secured business orders from various State distribution utilities on the verbal promise that it could get approvals from REC as its CEO also happened to head RGGVY.
Despite there being several CPSEs and private companies operating in the market for prepare detailed project reports (DPRs), choosing REC Power Distribution Company without following any tendering process is nothing but elimination of fair competition in the market, the complainant alleged.
REC, through a network of 13 project offices and five zonal offices, has been engaged in financing and promoting rural electrification projects across India. Its main objectives are to promote, develop, construct, own, operate, distribute and maintain 66 KV and below voltage class electric supply lines and provide consultancy in electrification for agencies/Government bodies in India and abroad.
Since REC Power Distribution Company is a wholly-owned subsidiary of REC, they may be considered as a group for the purpose of the Act, the order stated.