In a major embarrassment to the Power Department, the Law Department has raised serious questions on the draft distribution franchisee agreement signed between Meghalaya Power Distribution Corporation Limited (MePDCL) and Rural Electrification Limited (REC).
It may be noted that Meghalaya Energy Corporation Limited (MeECL) had given the green signal to hand over distribution franchisee to the REC for Shillong and Jaintia Hills, the most profit-making areas of the MeECL.
The Law Department in its observations has stated that the franchise agreement was executed without floating of any tender.
“The status of earlier loan agreement arrived at between the State government, REC and PFC has not been spelt out anywhere in this draft agreement,” the Law Department said.
It also said that in the recital part in clauses a, b, c and d, reference to the provision of the Electricity Act 2003 has been made without any specification of the provision of the Act.
“In clause c of the aforesaid recital, the word ‘central and eastern circle’ has not specifically indicated the jurisdiction of each circle. Moreover, government institutions and buildings have not been exempted from the purview of this agreement,” the Law Department said.
Further, the Law Department stated that if all the circles of MePDCL in Meghalaya are being handed over to the distribution franchisee (REC), it would create more aggregate, technical and commercial losses to the State “and may not be viable any longer in future”.
The Law Department also stated that the expiry date of the agreement of 25 years was not feasible. It also said that the initial period of contract should be for ten years subject to renewal through mutually agreed terms and conditions between MePDCL and REC.
The Law Department also raised questions to several clauses in the agreement even as it asked the Power Department to obtain the concurrence of the Finance Department before finalising the agreement.
It may recalled that on April 23, MeECL Chairman and Managing Director Arunkumar Kembhavi had informed the Power Department that the State government and MePDCL had signed an agreement for availing loans under Atmanirbhar Bharat Abhiyan launched by the Central government to infuse liquidity to clear the liabilities of power generation companies, transmission companies, etc.
According to Kembhavi, the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) at the time of execution of the agreement also put some additional clauses for Meghalaya. He also said that REC had insisted on 25 per cent of area in the State to be given for distribution franchisee in lieu of 25 per cent budgetary support.
Kembhavi had also revealed that in the meeting held on April 23 chaired by Chief Minister Conrad Sangma and attended by Power Minister James Sangma and other officials, approval was given by the State government to implement the proposal for engagement of distribution franchisee for Eastern Circle (Jaintia Hills) and Shillong Central Circle.
