CAG report flags Rs 2.69 crore undue benefit to Sikkim Manipal University

The Comptroller and Auditor General (CAG) of India has flagged a significant lapse in the classification of electricity tariffs, which resulted in an undue benefit of Rs 2.69 crore to Sikkim Manipal University (SMU) over five years, from 2017-18 to 2021-22. 

The misclassification, identified in the CAG's latest audit report, caused substantial revenue losses to the Power Department of Sikkim (PDS).

The audit revealed that SMU was charged under the Bulk Supply High Tension Industrial Supply (HTIS) category instead of the standard HTIS category, which applies to most industrial and institutional consumers. 

The Sikkim State Electricity Regulatory Commission Tariff Schedule (SSERCTS) clearly defines Bulk Supply as a category meant for military establishments, government buildings, hospitals, and similar state-run institutions. However, SMU, which is a private educational institution with a teaching hospital, was incorrectly classified under this category.

Due to this misclassification, the university was charged Rs 12.33 crore in energy costs, whereas, if correctly placed under HTIS, the charges should have amounted to Rs 15.02 crore. This discrepancy resulted in a financial loss of Rs 2.69 crore for the state’s power department.

When questioned, the Power Department of Sikkim justified the classification by citing that SMU was established under a State Legislative Act and that its teaching hospital provides essential services. However, the audit dismissed this justification, pointing out that other institutions that were also established through state legislation, such as Sikkim Manipal Institute of Technology (SMIT) and Shri Ramasamy Memorial (SRM) University, were correctly placed under the standard HTIS category.

Also Read: Sikkim: Citizen Action Party opposes Rs 50 tourist entry fee, calls for rollback

The auditors further noted that the teaching hospital component of SMU did not automatically qualify the entire institution for the Bulk Supply category, as private institutions and universities do not fall under government-run establishments. This misclassification highlights potential lapses in the application of tariff rules, leading to unwarranted financial advantages for specific consumers.

Apart from the misclassification of SMU, the audit report also highlighted another instance of revenue loss due to incorrect tariff application in the Ravangla circle for the year 2020-21. It was found that the Power Department had charged lower-than-notified rates for both HTIS and Bulk Supply consumers, resulting in a short assessment of ₹25.37 lakh in electricity charges.

The audit noted that such lapses in tariff application contribute to cumulative financial losses for the state government and urged authorities to reassess and enforce proper tariff structures to ensure fair revenue collection.

The findings from the audit raise significant concerns about revenue assessment, tariff compliance and governance in the Power Department of Sikkim. Such errors in classification and tariff application not only result in financial losses for the government but also set a precedent for potential misuse of the power tariff structure.

The audit has recommended a thorough review of consumer classifications to prevent similar discrepancies in the future. It also suggested that the Power Department strengthen its monitoring mechanisms and ensure strict adherence to the SSERCTS guidelines to avoid further revenue leakages.