PSUs unwilling to lower profit margins for power infrastructure projects

PSUs unwilling to lower profit margins for power infrastructure projects

SRINAGAR: The stalemate between the government and public sector undertakings (PSUs) entrusted with overseeing two power projects in the Valley has not ended because the PSUs are unwilling to reduce their profit margins. Last month, the Government of India’s power ministry had asked the state government to reduce the PSUs’ profit margins from 9.75 percent to 6 percent.
Kashmir Reader has learned that the companies, REC Power Distribution Company Limited (REC PDCL) and PGCIL (Power Grid Corporation of India Limited), told the power department in a meeting on Wednesday at Jammu that they cannot start work at 6 percent profit.
A top PDD official privy to the development said that the companies are willing to start work by reducing the 9.75 percent profit by one-fourth, that is, by 2.43 percent.
“A meeting in this regard was held in Jammu on November 29. No decision was taken as the companies refused to accept the government’s offer. The meeting ended without any results because the companies were ready to cut rates by 25 percent on the 9.75 percent profit margin. No dates for a fresh meeting were decided,” the PDD official said.
In the meeting, he said, the power secretary represented the state government and the companies were represented by their officers.
The two companies were granted the contract without going through a tendering process after the government cancelled the contracts of two companies which had earlier acquired the tender for electrification of villages and putting up new power cables in six Kashmir districts. The projects are expected to reduce power cuts in the power-deficient Valley.
Kashmir Reader was the first to expose how the government flouted rules to benefit the two PSUs. The newspaper accessed email correspondence between the Minister of State (MoS) for Power, Syed Farooq Andrabi, and PDD officers, which showed that Government of India’s power ministry had raised questions about giving the power projects to the two PSUs on 9.75 percent profit margin.
The PDD official said the stalemate is the third hiccup that has come in the projects’ way. He said the first snag was the lack of response to tenders from companies, the second was the cancellation of the contract to the two private companies which won the contract, and the subsequent suing of the government in court, and the third is the current stalemate on profit rates. The official said the delay is causing huge loss to Kashmir as the state has been waiting for these projects for many years.
The Prime Minister’s Development Plan (PMDP-Rural) and the Deen Dayal Upadhyaya Grameen Jyoti Yojana (DDUGJY) are the two schemes under which the project to replace transformers and cables and provide electricity to un-electrified villages is to be carried out.

 

 

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