A recent audit by the Comptroller and Auditor General of India (CAG) has exposed large-scale financial mismanagement and corruption in the Sikkim Power Department between 2017 and 2022. The report highlights that over ₹2000 crore, including ₹820.08 crore from power trading, was not deposited into the state’s Consolidated Fund and was instead misused for unauthorized expenses.
According to the CAG report, Sikkim earned ₹3410.08 crore in revenue from domestic sales, royalties, and power trading during the five-year period. However, only ₹1488.92 crore (44%) was deposited into the state treasury. The remaining ₹1921.16 crore was used directly by the department without legislative approval, violating constitutional provisions.
Funds were allegedly misused to repay loans, cover operational costs, and pay staff salaries. The department borrowed ₹225.07 crore at 12% interest to cover trading losses, even though fixed deposits earning 7% interest were available. This led to an extra interest burden of ₹8.32 crore.
Sikkim’s power trading activity resulted in a total loss of ₹249.76 crore between 2017 and 2022 due to poor market strategy. The purchase price of power increased from ₹3.52 per unit in 2017-18 to ₹4.71 per unit in 2021-22, but the selling price in the market remained lower, causing consistent losses.
Between 2017-18 and 2021-22, Sikkim incurred a total trading loss of ₹249.76 crore due to poor market strategy and mismanagement. The state purchased surplus power at a higher rate and sold it at a loss in the power exchange.
- In 2017-18, Sikkim purchased power at ₹3.52/unit but sold it at ₹2.10/unit, leading to a loss of ₹1.42/unit.
- In 2019-20, the purchase price was ₹3.95/unit, while the sale price was ₹2.28/unit, resulting in a loss of ₹1.67/unit.
- In 2021-22, the purchase price rose to ₹4.71/unit, but the sale price remained at ₹4.24/unit, causing a loss of ₹0.47/unit.
The total loss from power trading over the five years amounted to ₹249.76 crore.
On same Report, ₹820.08 crore earned from power trading was not deposited into the state’s consolidated fund but was used directly by the department without legislative approval.
The report also points to cases of favoritism. Akshay Ispat and Ferroy Alloys Pvt. Ltd. received a refund of ₹0.32 crore despite contractual violations, resulting in a total discrepancy of ₹376.94 crore. Sikkim Manipal University was billed under a lower tariff category, causing a revenue loss of ₹2.69 crore.
PDS failed to recover ₹6.55 crore in unpaid dues from Lanco and Jal Power Corporation despite repeated defaults. No legal action was taken, allowing these companies to avoid payment.
The report also highlighted that the Power Department violated the Sikkim Government Guarantee Act, 2000, by issuing unauthorized financial guarantees worth ₹600 crore without state legislature approval. Improper bookkeeping led to ₹92.27 crore being unaccounted for.
CAG has recommended strict action against officials involved in financial mismanagement, improved transparency in power trading, and restructuring of high-interest loans. The findings have raised serious concerns about the financial handling of Sikkim’s power sector and called for immediate corrective measures.
The CAG report directly holds the Power Department officials responsible for financial mismanagement and unauthorized use of funds. Poor budget planning, signing of excessive power purchase agreements (PPAs), and failure to adjust power requirements based on actual consumption contributed to these losses. The department also failed to implement corrective measures even after warnings from internal audits.
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