Jharkhand CM’s ministry invests in loss-making PSUs, exchequer loses ₹2,092.21 cr,  states CAG

The loss to 10 Public Sector Undertakings in Jharkhand amounts to ₹2,092.21 crore over the past three years and the loss to the remaining 14 PSUs could not be assessed as they have not finalised their accounts in the last few years, states the Comptroller and Auditor General report.

“The 10 PSUs generated average negative Return on Investment (RoI) of 18.34% on the investments (equity and loans) by the State Government during 2014-15 to 2016-17. Against this, the average cost of borrowings of the State Government was 6.87% during 2014-15 to 2016-17. Thus, the loss to the public exchequer as a result of the investment in the 10 PSUs that had finalised their accounts in the past three years amounted to ₹2,092.21 crore,” states the CAG report.

The CM Raghubar Das-led Jharkhand government has ensured that the state government’s investment in PSUs have been in loss-making three power-sector companies (Jharkhand Bijli Vitran Nigam Limited, Jharkhand Urja Sancharan Nigam Limited, Tenughat Vidyut Nigam Limited).

Jharkhand Bijli Vitran Nigam Ltd (JBVNL) was the worst performer, according to a study on financial health of discoms by India Ratings for the years 2015-16 and 2016-17. Not surprisingly, the power ministry is being handled by the Jharkhand Chief Minister.

Against norms, only nine working PSUs and one non-working PSU had finalised their accounts for the years 2014-15 to 2016-17 as on December 31, 2017. Of the 24 PSUs in Jharkhand, three are non-functioning and had no employees, yet there was an investment of ₹35.75 crore as of March 31, 2017.

The Companies Act, 2013 stipulates that the annual financial statements of companies are to be finalised within six months from the end of the relevant financial year. Failure to do so may attract penal provisions, under which, every officer of the concerned defaulting company shall be punishable with imprisonment or with a fine of not less than ₹50,000.

Out of 21 working PSUs, only two PSUs finalised their accounts for the year 2016-17 while 19 PSUs had arrears of 54 accounts until December 31, 2017, with the extent of arrears ranging from one to eight years.

“The three non-working PSUs had arrears of 15 accounts ranging from one to eight years. The Jharkhand government had extended budgetary support of ₹2,659.56 crore to 12 working PSUs during the period for which accounts were in arrears, out of which ₹208.22 crore was extended to six working PSUs, whose accounts were in arrears for more than three year,” reports the CAG. The Jharkhand CM has also kept the Finance ministry, which allocates these funds, with himself.

The CAG report pulled up the finance department under Raghubar Das and has asked them to ensure that budgetary support was not extended to such PSUs.

The Modi government’s flagship scheme Ujwal Discom Assurance Yojana, which was launched with an objective of financial turnaround of the state power distribution corporations (discoms) has also failed.

As per MoU between the Centre, Jharkhand govt and JBVNL, the state government was required to take over debt of JBVNL by providing grant Whyof ₹6,136.37 crore during 2015-16. Instead, Jharkhand had provided the amount as loan which resulted in annual interest liability of ₹797.73 crore on the company in violation of MoU.