CAG Report highlights the irregularities of NVVN: Encashed Bank Guarantee not kept in separate Bank account
As per Migration Scheme the Project Developer was to provide a performance guarantee to NVVN in the form of Bank Guarantee (BG) at the rate of ` 50 lakh per MW. This BG was to be encashed by NVVN if the SPV power plants were not commissioned within 12 months and solar thermal in 28 months from the date of signing of PPA. During the course of implementation of the scheme, NVVN encashed total BG of ` 147.42 crore27 from March 2011 to March 2014. MNRE directed (June 2012) that the money so obtained after encashment of BG be kept separately in maximum interest bearing account. It further directed (December 2012) that NVVN may use the funds as working capital for (i) coverage of litigation charges and (ii) releasing payments to SPDs towards settlement of their claims, with the condition that NVVN will recoup the funds by its receipts from Discoms and the total amount will remain the same (i.e. the amount realized from encashment of BGs). Out of ` 147.42 crore, NVVN utilized ` 97.79 crore for non-payment of dues by Discoms under JNNSM scheme and ` 1.30 crore for legal expenses. Audit observed that NVVN did not keep the above money in a separate account as directed by MNRE (June 2012) and it cannot be assured in audit that money was not used as working capital. NVVN (September 2014) stated that there was no direction from MNRE to open the separate account for this money and that it was keeping its accounting separate from NVVNs business money/revenue. Reply of NVVN was not tenable, as the order of MNRE (June 2012), clearly stated that the money should be kept separately in maximum interest bearing account which had not been done by NVVN.