The CMD of MeECL writes to Power Secretary to constitute an independent inquiry

Shillong, April 07: Today the Chairman cum Managing Director of the MeECL Mr Arunkumar Kembhavi IAS has written to the  Secretary to the Government of Meghalaya, Power Department, on the, allegation of mismanagement in Energy Management cell.

The letter of the CMD of the MeECL to the power secretary, the SP News Agency carried as it is. Sir, With reference to the subject mentioned above, I have the honour of informing you that the undersigned had ordered an inquiry into the allegation of violating laid down procedures in energy management cell.

Copies of the institution of inquiry, suspension order of Shri H Jyrwa Superintending Engineer (Energy Management, SE-EM) and inquiry report are enclosed. After perusing the report of the inquiry officer very carefully with abundant caution, following are my observations.

It has been well established that Shri H Jyrwa Superintending Engineer (Energy Management, SE-EM) had acted on his own volition upon receipt of proposals from the energy traders viz M/s Arunachal Pradesh Power Corporation Limited and M/s Kreate Energy and had issued the Letter of Intent (LoI) for power banking at his level without consulting his superiors or the undersigned. He has not even marked a copy to anyone besides SLDC, the motives for which are unknown. This is in complete violation of all established norms, office procedures irregardless of the Board’s authorisation to SE EM.

Board had given authorisation to SE EM for energy trading. However, the implicit meaning is that SE EM shall place it before the Power Management Committee meeting, in the absence of which take necessary approval from his superiors.

It has been found out from the records that none of the proposals accepted by SE EM are through calling tenders or expression of interest. It is interesting to know that there are many such traders in the energy market and only proposals from 2 have been accepted and have been given LoI.

I understand that energy trading is done on a real time basis. In spite of that urgency, many proposals I have cleared from my table because due diligence has to be exercised before making any decision, but not the ones under question. Nor has it been placed before the superiors or Board of Directors for ex post facto approval. Power banking runs into crores of rupees. Thus, the SE EM knowingly exceeded the delegation of financial powers.

It has been found out that Kreate Energy had entered into a 5 years contract in 2016 for power banking, the same got expired in March 2021. The undersigned had rejected the proposal for extension beyond 5 years when it was proved beyond doubt that power trading is much more beneficial to the Corporation than power banking.

In the last 6 months because of the competition ensured by the undersigned among the 2 traders, the trading margin has come down to 2.75 paise from 3.00 paise thus with a net benefit of 0.25 paise per unit which is substantial. By not ensuring competition the energy management has caused a huge amount of presumptive loss to the Corporation in the last 10 years.

Total power supplied by MePDCL to other utilities though traders under banking arrangement from FY 2015-16 till November 2020 is more than 1700 Mus (approx.). If the same power had been sold on IEX in the respective years, the total revenue earned would have been more than 450 Crores (approx.) as per the average IEX rates.

During the meeting held on 28th March 2021 with the MeECL Engineers’ Association, one of the members alleged that the Energy Management cell had sold energy at as low as 15-20 paise per unit whereas the same energy is being bought by the Corporation at as high as 6 Rs per unit. This however could not be independently verified through records.

One of the traders M/s Kreate Energy is involved in large scale embezzlement with Uttarakhand Power Corporation Ltd (UPCL). The Director (Finance) UPCL had written to the undersigned (copy attached) that the Rs 40 crore unpaid amount due from Kreate Energy be adjusted from the payments due to Kreate Energy from MePDCL. 3 officials from UPCL are under suspension because of this incident. By trading with a company with such dubious credentials Shri Jyrwa has compromised the integrity of the Corporation.

When it came to my cognizance that the power banking LoI has been issued to the two traders without my knowledge I had immediately called for the file and had stopped the LoI. However, Kreate Energy had refused to comply with the termination of an already issued LoI and the same LoI had to be converted into purchase order as per the explicit wishes of Kreate Energy.

For the power banked before that period, Kreate has still not returned the power due to MePDCL for the months of March and April 2021. Meghalaya had to undergo massive regulation because of power shortage during this period. This establishes the devious nature of the company in question. All these things should have brought to my attention by the Energy Management cell which they failed to do so.

It has also been alleged that there is no clause of Late Payment Surcharges in the agreement with Kreate Energy. Because of this, Kreate has hoarded crores of rupees which should have been credited to MePDCL’s account on the very next day of trading.

Through independent sources it has been found that because of the indiscreet and imprudent power trading arrangement with Arunachal Pradesh Power Corporation Limited and Kreate Energy for the last 10 years the Corporation has suffered a presumptive loss of 134 crore which could have been saved had there been proper planning. However, this needs citation and evidence.

It has also been found from records that certain cement companies were favoured with lop-sided agreement of power banking potentially causing crores of rupees loss to the Corporation. Transmission charges accruable to MePTCL which should have been borne by the cement companies were actually passed onto the MePDCL because of wilful omission of clause in the agreement which is a very standard clause.

This power banking has been discontinued by the undersigned immediately after noticing the lapses. The same cement companies have now agreed to purchase the deficit electricity from MePDCL at normal industry tariff and the surplus from captive power plants will be injected back to the MePDCL grid at 1 Re which is extremely beneficial to the Corporation. This should be inquired and people responsible for this lapse be identified and losses be recovered.

Since the time we have started with proper scientific energy planning and management, the Corporation has saved Rs 2.59 crores in March 2021 itself. The same quantum of saving could have been achieved in the past also, in high rainfall months by selling surplus at higher rates and in lean months by purchasing at lowest available rates either from exchange or bilateral trading. This would have brought hundreds of crores of additional revenue to the Corporation.

Therefore, in the backdrop of all these facts and general allegations which run deep and across decades and departments including MePTCL, it is my considered opinion that the internal inquiry is inadequate to go into such magnitude.

Hence the case be referred to the state government with a recommendation to constitute an independent inquiry committee outside of MeECL or handover the probe to an investigative agency as deemed fit by the competent authorities. This is for favor of your kind information and necessary action. Arunkumar Kembhavi IAS, CMD, MeECL.


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