BANGALORE: A delay by the Karnataka Congress government in finalizing tenders for short-term electricity purchases has resulted in an additional burden of Rs 113.42 crore on consumers, as outlined in a letter by the Comptroller and Auditor General (CAG). This lapse, which occurred during the procurement process for power at competitive rates, highlights the financial consequences of administrative delays within the state’s Energy Department.
The letter, sent by the Principal Secretary-General to the Karnataka Energy Department on August 23, 2024, seeks an explanation for the delayed actions. It details how repeated amendments to the tender process caused a missed opportunity to secure electricity at lower prices, leaving consumers to shoulder the cost.
The primary issue revolves around the delayed procurement of electricity for the period between October 2023 and May 2024. Despite the Ministry of Power, Government of India’s guidelines for tariff-based competitive bidding for short-term power, the Karnataka government delayed its tender process by amending it four times.
Originally, bids were called to address the state’s electricity needs at competitive rates. However, due to bureaucratic delays, the process was not completed within the given timeframe. As a result, the state had to procure power at higher rates, adding a Rs 113.42 crore burden on consumers, as per the CAG’s findings.
Anticipating power shortages, the Ministry of Power had recommended short-term electricity procurement based on seasonal factors like rainfall and the state’s power generation capacity. Karnataka’s estimated power shortage for the period between September 2023 and May 2024 was 1200 mega units (MU).
To meet this demand, Karnataka Power Corporation Limited (KPCL) and Power Company of Karnataka Limited (PCKL) were tasked with securing 1000 MW of Round-The-Clock (RTC) power and 250 MW for peak hours. Approval for this procurement, with a ceiling tariff of Rs 4.02493 per unit, was sought from the Karnataka Electricity Regulatory Commission (KERC), and approval was granted under the condition that reliable power supply be maintained.
However, administrative inefficiencies caused significant delays, leading to complications in the procurement process.
The State Pre-Tender Scrutiny Committee had directed the PCKL to invite tenders through competitive bidding, yet crucial administrative approval for the short-term procurement was not obtained on time. Eventually, approval was granted through a circular, allowing the tender process to progress in October 2023.
Despite this, the tender process faced multiple revisions, and the final bid submission deadline was extended to December 29, 2023. Unfortunately, the bids received exceeded the approved ceiling price, and Karnataka, facing a worsening power shortage, requested KERC to lift the price cap so that power could be procured via reverse auction or the Deep Portal at prevailing market rates.
KERC agreed to remove the price cap on December 13, 2023, but further delays ensued. Ultimately, the tender attracted bids from only two companies—Coastal Energy Limited and DB Power Limited. The CAG’s letter criticized the inefficiencies in handling the tender, pointing out that the proposal to proceed with the delayed tender was only presented to the Standing Committee in January 2024, long after it should have been completed.
The delay has cost Karnataka’s electricity consumers Rs 113.42 crore in additional expenses due to the purchase of power at higher rates. This burden could have been avoided had the tender process adhered to its original timeline.
In light of the CAG’s findings, senior officials from the state’s Energy Department are reported to have discussed the matter with Chief Minister Siddaramaiah and Energy Minister KJ George. The CAG’s report has sparked discussions on improving the state’s procurement processes to avoid passing such financial burdens onto consumers in the future.
The Karnataka government’s delay in finalising its power procurement tender has had a direct and costly impact on consumers, underscoring the need for more efficient and timely decision-making. The CAG’s report calls for greater accountability and reforms in the state’s tendering process to prevent such mismanagement from recurring and to protect consumers from unnecessary financial strain.
