Confidential

OFFICE OF THE
ACCOUNTANT GENERAL (AUDIT)
MEGHALAYA, SHILLONG-793 001
Camp: O/o the Pr. Secy, Power Dept, Shillong

EPABX- 0364-2590818/19/23; FAX-2223494 E-mail: agauMeghalaya@cag.gov.in

Audit Query No. 4 Date: 22 April 2022

Sub: Unpreparedness and delay thereafter resulted in loss of free power to the State
Government.

Based on the approval (11th January 2013 and 22nd July 2013) of the High Power Committee
(HPC) to allot two Self Identified Projects (Nongummer Small Hydro Electric Project –
NSHEP (18 MW) and Umran Small Hydro Electric Project – USHEP (10 MW)), the
Government of Meghalaya (GoM) through the Power Department (PD) entered into two
Memorandum of Agreements (MoAs) (19th March 2013 and 7th January 2014) with two
private developers (M/s VARKS AVCO JV for NSHEP and M/s JMD Aqua Power Pvt. Ltd.
for USHEP) on Build Own and Operate (BOO) basis. The MoAs contained the same terms
and conditions. During the course of survey and investigation the generation capacities of
both the projects were revised as NSHEP to 24 MW and USHEP to 13.50 MW. As per the
MoA, the private developers were to submit the Detailed Project Report (DPR) within 48
months from the date of MoA. Accordingly, the private developers submitted the DPRs as
follows:
1. Nongummer Small Hydro Electric Project by (M/s VARKS AVCO JV on 3 rdFebruary
2016.
2. Umran Small Hydro Electric Project by M/s JMD Aqua Power Pvt. Ltd on 10 th
February 2017.
From the above it is seen that though the DPRs were submitted well within time by the
private developers, the PD, however, did not prepare itself for the works to be undertaken
from its end. This is evident from the following instances as indicated below:
1. Though the revised generation capacities were informed in 17 th March 2016for
NSHEPand 10th February 2017 for USHEP the PD failed to take early cabinet
approval for the same. The cabinet approval was received only on 21st November
2017. This procedural delay on the part of the PD led to the delay in submission of the
DPRs for vetting by the agency (IIT, RoorkeeAlternate Hydro Energy Centre).
 2. As the PD was not equipped with technical expertise, it failed to initiate the process of
identifyingthe technical agencies for vetting the DPRs. This process should have been
taken up before the receipt of DPRs and due to this delay it took the PD more than23
months (12th January 2018) to identify and subsequently allotthe work from the date
of receipt of the first DPR (NSHEP - 3rd February 2016).
3. Also it did not create a Head of Account (HoA) for routing the payment to the
agencies. This process was taken up (16th April 2018) only after the work for appraisal
of DPR was issued.Further being a new HoA it did not have any budget allocation and
thus the amount required had to be re-appropriated from another HoA. Sanction of the
amount for payment towards the agencies was received only on 3rd October 2018.
4. As per the Memorandum of Understanding (MoU) signed with the vetting agencies,
the appraisal of the DPRs was to becompleted within a period of two months from the
date of receipt of the requisite input data excluding the time required for furnishing
any additional data/replies by the Developer to the queries on the DPR raised by the
agencies. In this regard, it was seen that though the MoUs were signed on 9 th January
2019 for NSHEP and USHEP, the Report was submitted only on December 2019 for
NSHEP and June 2019 for USHEP. This indicates that the PDwas not monitoring the
progress of the appraisal works leading to delay in early completion of the appraisal.
5. On receipt of the Appraisal Project Reports from the agencies, the PD conveyed its
concurrence to the implementation of the projects only on 6th May 2020 for NSHEP
and 11th May 2020 for USHEP. However, till date (22nd April 2022), even after a lapse
of nearly two years the Implementation Agreement1is yet to be finalised by the PD.
Therefore, from the above, it is observed that the PD did not prepare itself for the upcoming
activities required from its end for smooth flow of works. All the above instances indicate a
lackadaisical attitude of the PD towards ensuring that all required activities are taken up well
before time. These instances have resulted in delay in taking up of construction activities and
consequent generation of power by the privatedevelopers which have ultimately led to a
minimum loss of free power of 2.49 MW daily (NSHEP:12 per centof 24 MW at 54 per cent
Net Plant Load Factor and USHEP:12 per centof 13.50 MW at 58per cent Net Plant Load
Factor).This could have also saved valuable resources of the GoM from Power Purchase.

1
The basis upon which the private developer can proceed with the initial formalities for obtaining various
clearances from various agencies before taking up the actual construction works.
Facts and figures may be confirmed while furnishing comments of the Department in this
regard.

Sr. Audit Officer

AMG-II/AP-1

To,
The Principal Secretary,
Power Department,
Government of Meghalaya,
Shillong-793001.