The J&K government will have to dish out around Rs 250 crore from its own kitty as project implementation charges towards central Public Sector Undertakings (PSU) which have been picked up for execution under various power development schemes in the state, an official said on Thursday.
The union power ministry has sanctioned more than Rs 3200 crore works under prime minister’s development plan (PMDP-rural), PMDP-urban, Deen Dayal Upadhyaya Grameen Jyoti Yojana (DDUGJY), Restructured Accelerated Power Development and Reforms Program R-APDRP-II and Integrated Power Development Scheme (IPDS), to J&K under “power for all” scheme for strengthening of transmission and distribution systems.
On Wednesday the government cleared RECPDCL, PGCIL and RECTPCL as project implementing agencies during a meeting at New Delhi while approving profit margins of 8 percent for transmission works and 8.5 percent for distribution networks works for them.
This agreement was in contravention to union power ministry directions which had asked state government not to pay more than 5 percent profit margins as project implementation charges and one percent as project monitoring charges.
“The state government will have to pay from its own kitty these profit margins of 8 percent and 8.5 percent and not from the funds under the schemes. Both these charges sum up to around Rs 250 crore,” said the official, adding these charges would be excluding taxes.
While the guidelines provide for appointing project implementation agency (PIA) for ensuring transparency and pace of the work, the government could have allowed the power department to carry out the works locally. It could have in turn saved the profit margins.
While the distribution works are to the tune of Rs 2600 crore, the transmission works amount to around Rs 600 crore.
To begin with, the three PSUs will now start work in eight identified districts of the state including Pulwama, Shopian, Ganderbal in Kashmir; Leh and Kargil districts of Ladakah and Reasi, Udhampur, and Ramban districts in Jammu. The remaining districts will be taken up only after completion of works in these eight districts.
The official said the CPUs as an “established practice” sublet these works to local contractors.
“In the end all these works will be executed by locals and the PSUs will end up earning their profit margins,” said the official.
The issue of handing over power works to PSUs had come for discussion during a meeting between former union power minister PiyushGoyal and JK power minister Nirmal Singh in New Delhi in 2016.
That time Goyal had insisted that instead of allocating the works to PSUs, the state power department should be encouraged to execute the works.
“Ultimately these PSUs pick up then local contractors to get the works done,” a chief engineer who was part of the meeting quoted Goyal.
However the administrative department (power) later cancelled the tenders floated by the department’s project wing that time and handpicked the PSUs without following any tendering process when Dheeraj Gupta was administrative head of the department.
There are also apprehensions that the scope of works would come down owing to higher charges quoted by the PSUs.
“Had state power department been allowed to execute the works the government would have saved these Rs 250 crore profit margins payable to the PSUs. The guidelines provide for picking up a project monitoring agency to ensure quality work and not project implementation agency (the three PSUs),” said the official.
Another official however said given the “huge scope of works” and the 2019 deadline for completing the program, the government had to involve the PSUs for speedy work.
“First the tendering process consumes lot of time and then the works get delayed due to procurement of material and other issues. Often we have seen works being carried out locally landing in courts and sometimes in vigilance net. Also, we have seen known PSUs are reluctant to participate in tendering process by state government due to the prevailing situation and also due to delay in release of payments to them by the government,” said the official.
The development commissioner power Asgar Ali Majaz confirmed the state will have to pay profit margins of around Rs 200 to 250 crore to the PSUs from its own kitty. “The works will start once all the formalities are completed,” said Majaz.