DDCs misuse grants offered to energy projects


    District development committees (DDCs) have been misusing grants extended by the Ministry of Energy (MoE), says the latest audit report of the Office of the Auditor General.

    In the last fiscal year, 66 DDCs were extended conditional grant of Rs 1.39 billion to facilitate works related to electricity generation in areas where energy projects are located.

    “But Kavrepalanchowk DDC used Rs 1.4 million to collect data on damage caused by earthquakes of April and May. Kapilvastu DDC, on the other hand, spent Rs 40.10 million to repair road, culvert and temples, while Nawalparasi DDC and Nuwakot DDC spent Rs 25.90 million and Rs 7.7 million, respectively, for similar purposes,” the report says, adding, “The MoE has failed to look into these malpractices, which has been taking place for quite some time.”

    The report also says the government has failed to monitor whether tax concessions extended to hydro project developers have been utilised properly.

    The Electricity Act allows the MoE to extend concessions on customs duty and value added tax to developers building hydroelectric projects. The Act also entitles developers to foreign exchange facility.

    As per these provisions, the Department of Electricity Development (DoED) recommended for concessions worth Rs 12.91 billion, says the report.

    “But the DoED has not checked whether the concessions were used for the said purpose,” adds the report.

    Also, the DoED has been failing to collect royalty from hydroelectric projects that have started commercial operation.

    As per the Electricity Act, projects have to pay annual royalty of Rs 100 per kilowatt of installed capacity and two per cent of the electricity tariff in the first 15 years of commencement of commercial operation. After the 15-year period, the annual royalty amount rises to Rs 1,000 per kW and 10 per cent of the electricity tariff.

    The due royalty amount as of fiscal year 2013-14 stood at Rs 1.35 billion, of which Rs 1.14 billion was recovered in the last fiscal year, says the report. “The DoED should recover the remaining due amount of Rs 214.30 million,” adds the report.

    The report has also called on the DoED to expedite the process of extending survey and electricity generation licences to projects.

    The process of extending 111 survey licences has been pending for the last nine years, while the process of extending 73 electricity generation licences has not moved ahead in the last seven years, says the report, adding, “Such decisions should be made on time.”

    Source : The Himalayan Times.