AP Report 2019-final

A. DISALLOWED EXPENDITURE
1. Financial Assistance to DISCOMs
Financial Reconstruction Package
(FRP) to Power Distribution
Companies (DISCOMs):
Vide OM no. 20/11/2012 dated 5 October
2012, Ministry of Power, GoI, notified a scheme
for financial restructuring of the State-owned
DISCOMs to improve operational performance
and finance health. As per this scheme, 50%
of the short term liabilities are to be issued as
bonds by DISCOMs on behalf of the State
Government, which in turn will be taken over
by the State Government over a period of 3-5
years. The responsibility of payment of principal
and interest lies with the State Government
from the date of issue of these bonds. The State
Government should ensure that issuance of
Special Securities is within the targets
prescribed in Fiscal Responsibility and Budget
Management Act (FRBM) and the State should
remain within its Net Borrowing Ceilings of
each relevant fiscal year (Annexure -7).
Accordingly, the erstwhile Andhra Pradesh
State Government has given guarantee for an
amount of Rs. 8,600 Crore and DISCOMs
issued bonds in 2013-14. Out of this, Rs.
3,610.82 Crore has been shared with the
Successor State of Andhra Pradesh.
Accordingly, Rs.1,500 Crore debt burden of
the DISCOMs was taken up by the State
Government in 2014-15. As per the procedure,
the consent of Government of India was
obtained under Article 293(3) of the
Status Report - Union’s Commitment to Andhra Pradesh
Constitution of India for taking over the
liabilities of Rs. 1,514.82 Crore vide letter No.
40(1)PF-I/2011, Ministry of Finance
Government of India, dated 13 March 2015
within the permitted borrowings, and Reserve
Bank of India permitted to issue Special
Securities for taking over these bonds
(Annexure- 8). Accordingly, Rs.1,500 Crore
was raised by issuing bonds and the amount
was passed on to DISCOMs, and Rs.1,500
Crore was debited to head of
A/c 2801-05-800-(12) assistance to DISCOMs
for taking over of the FRP bonds -310-Grantsin-aid
-312 Other Grants-in-aid. Accordingly,
orders were issued in G.O. Ms.No.34, Finance
(PF & NABARD) Department dated 31 March
2015 (Annexure -9). Since this amount was
passed on to DISCOMs, this was classified
as revenue expenditure by the Comptroller and
Auditor General of India, as per the
classification given by the Government of India.
As per Rule 14 of the Accounting and
Classification of Grants-in-Aid notification
dated 19 May 2011 issued by Ministry of
Finance (Department of Economic Affairs),
this amount comes under Grants-in-aid.
Therefore, the Accountant General had
classified this as revenue expenditure. Further,
the State is obligated to repay this amount of
Rs 1,500 Crore along with interest. The State
had incurred the cost and acquired the liability
to repay the money during FY 2014-15 under
an on-going programme launched by the Union
Government.
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