Bihar’s ‘₹62,000-Crore Power Deal’ and Missing Audit Lens

Bihar’s ₹62,000-crore controversy is not just electricity pricing, but a test of how India’s audit conscience keeps pace with fiscal risks.

By P SESH KUMAR

New Delhi, November 7, 2025 — When a former Union Power Minister accuses his ‘own’ government in Bihar of gifting ₹62,000 crore in “windfall gains” to a private operator through a 25-year power purchase agreement (PPA), India ought to sit up. R.K. Singh’s explosive claim that Bihar agreed to buy power at ₹6.075 per unit—₹1.41 higher than what he calls a fair price—has ignited a storm of outrage and confusion.

This article attempts to dissect his math, deconstruct the costing of thermal power, compare Bihar’s tariff with contemporary benchmarks, and, crucially, asks why the Comptroller and Auditor General (CAG) of India has remained silent. The larger story is not only about what Bihar may have overpaid—but about why India’s top auditor failed to test the numbers before the headlines did.

The charge sheet vs. the paperwork

Singh’s televised charge was delivered with prosecutorial flair: Bihar, he thundered, had signed a 25-year power supply deal worth over ₹62,000 crore in excess payments by agreeing to ₹6.075 per kWh instead of roughly ₹4.6. The project—2,400 MW (3×800 MW) ultra-supercritical at Pirpainti, Bhagalpur—was, however, awarded through a tariff-based competitive bidding (TBCB) process under the Ministry of Power’s DBFOO model.

The tariff was discovered through an ‘e-reverse auction’, adopted by the Bihar Electricity Regulatory Commission (BERC) on 27 August 2025, and backed by a 25-year Power Supply Agreement (PSA) in September. Multiple bidders were understood to have participated; the lowest quote of ₹6.075 per unit is stated to have emerged after electronic competition and was legally adopted under Section 63 of the Electricity Act.

Thus, unlike many earlier generation deals struck by negotiation or nomination, Bihar’s project would appear to have followed the formal playbook. The question then becomes—not whether there was a process, but whether the process yielded a price consistent with cost fundamentals.

Can we deconstruct the ₹1.41 “excess”: the anatomy of a kilowatt-hour?

Power tariffs are complicated creatures, a mix of engineering, logistics, and finance. Singh’s allegation presumes a “should-cost” of ₹4.6–₹4.7 per kWh. He has been a Union Power Minister and one could credit him with more than passing familiarity. But unless that figure is built from first principles—plant cost, fuel cost, and financing—it risks remaining rhetorical. Let me attempt this on the basis of data in public domain.

Fixed-cost component

For an ultra-supercritical (USC) coal plant, capital cost typically ranges between ₹7.5–₹8.5 crore per MW, depending on land, transmission interconnect, and emission controls. Financing at 70:30 debt-equity, with 10.5 percent interest and 15 percent post-tax return on equity, produces a fixed charge of ₹2.30–₹2.60 per unit for 85 percent plant-load factor (PLF). Bihar’s Pirpainti site, being greenfield, carries additional IDC (interest during construction) and transmission interface cost, nudging that fixed charge toward ₹2.70–₹2.80.

Variable-cost component

The variable cost rides on coal grade and rail distance. Eastern Coalfields coal (GCV ~ 4,500 kcal/kg) delivered over 400–600 km adds ₹1,500–₹2,000 per tonne of logistics to a base pithead price of ₹2,000–₹2,500, yielding a landed cost near ₹4,000/tonne. With a heat rate of 2,300 kcal/kWh and 1.1 kg coal per kWh, fuel alone could cost ₹4.40–₹4.50 per unit before O&M. After auxiliary consumption and escalation, the variable cost may stabilize around ₹3.10–₹3.30 per unit.

If we add the two and we approach ₹5.90–₹6.10 per unit-precisely the ballpark of Bihar’s discovered tariff.

Hence, Singh’s “should-be ₹4.6” looks implausibly low unless it assumes a pithead plant with negligible transport cost, shorter debt tenor, or concessional coal.

Benchmarking Bihar: the national tariff landscape

To test the allegation, should we not compare apples with apples. Let me attempt this:

State	Year	Capacity	Discovered Tariff (₹/kWh)	Remarks
Madhya Pradesh	2025	1699 MW ( Adani, DBFOO)	5.838	Pithead/short-haul coal, existing transmission
Bihar (Pirpainti)	2025	2,400 MW (Adani, DBFOO)	6.075	Long-haul coal logistics, new evacuation
Assam	2025	3,200 MW (coal tender)	Around 6.30	Difficult terrain, limited rail connectivity

Bihar’s tariff would appear to lie between MP and Assam, hardly an outlier. If a windfall exists, it could be within the market band of current greenfield thermal costs, not necessarily, a statistical anomaly.

Costing optics vs. risk pricing

Singh’s accusation also underplays risk premiums embedded in long-term contracts. The Pirpainti bid would appear to lock in 25 years of supply with fixed and indexed components covering inflation, exchange risk on imported equipment, and future emission-control retrofits. The bidder would bear construction and fuel-supply risk; its internal rate of return (IRR) must reflect that uncertainty. A 0.25–0.30 per unit “insurance” for execution and regulatory risk would appear standard in DBFOO bids.

Thus, even if Bihar’s tariff would appear higher than a pithead benchmark, the uplift could represent priced-in uncertainty, not political favour—the defenders of Pirpainti bid could argue.

Where Singh is directionally right

Still, Singh’s moral instinct finds footing in scale. A 25-year contract at ₹6.075 locks Bihar into over ₹2 lakh crore of payments. A mis-pricing of even ₹0.20 per unit translates to ₹10,000 crore over the term. In a state with fragile finances, that is not a rounding error—it a generation’s worth of fiscal space. Hence, his call for scrutiny is justified, even if his numbers may not.

The CAG’s silence: the dog that didn’t bark

And now the most disquieting question-where is the CAG?

A ₹62,000-crore allegation in the power sector, made publicly by a former Union Power Minister, should have triggered immediate risk-based scrutiny. The CAG’s audit plans include “risk assessment matrices” that rank entities and subjects by materiality and public sensitivity. By those standards, Bihar’s power purchase ought to have been a top-ten audit pick.

Yet, months later, no preliminary study, no audit note, no suo-motu examination has appeared- admitted that CAG is publicity reticent. The omission jars, especially when the same institution once sprang into action over coal-block allocations, spectrum pricing, and commonwealth games of ‘similar’ magnitude.

A question of priorities

This silence could suggest possible drift in the CAG’s risk-based audit methodology. If its selection model leans too heavily on routine departmental nominations rather than real-time public-interest triggers, it risks becoming bureaucratic instead of strategic.

In an age when billions move through concession contracts, public audit must be agile enough to pivot toward emerging fiscal fires—even those revealed by insiders, not whistle-blowers. Elsewhere, CAG is announcing—if not from rooftops—that it is well and truly into use of Artificial intelligence in a big way in its audits and upgrading audit skills.

The optics matter. The 2G and coal-allocation audits once made the CAG a household acronym for integrity. Its silence and non-appearance on a ₹62,000-crore question of power pricing risks the opposite perception-that it audits ‘safely’ after the dust has settled or worse- audits selectively.

What a timely audit could answer

A CAG examination could dissect: Whether the tender’s qualification and bid parameters unduly restricted competition.

If coal logistics and heat-rate assumptions were independently validated by BERC before tariff adoption.

Whether cost escalations and change-in-law clauses expose the state to future liabilities.

If risk sharing between generator and distributor conforms to Model Bidding Documents.

The audit trail of such a massive contract, if illuminated early, would reassure citizens that constitutional oversight still precedes scandal rather than follows it. It would set the rumours floating around in public domain- somewhat at rest.

Between discovered price and public trust

Even if subsequent scrutiny upholds the ₹6.075 tariff as fair, the episode underlines the growing gulf between technical legitimacy and public credibility. Competitive bidding can produce a market-cleared price, but unless the underlying cost logic is transparent, public suspicion fills the gap. The CAG’s role is precisely to bridge that gulf-to translate megawatt math into rupee truth.

Prescribing Policy Prescriptions

Immediate performance audit: The CAG should undertake a focussed audit of Bihar’s Pirpainti project, examining the cost build-up, competition depth, coal logistics, and regulatory vetting.

Transparent “should-cost” model: Publish a standardized, location-specific cost model for greenfield coal projects to prevent arbitrary benchmarks in future tenders.

Dynamic risk scanning: If necessary, revise the CAG’s annual audit plan to include automatic triggers from credible public or ministerial disclosures.

Regulatory disclosure reform: Work towards mandating every SERC to publish comparative cost tables before adopting discovered tariffs under section 63

If accountability agencies react only after viral videos, governance loses the plot. Bihar’s ₹62,000-crore controversy is therefore not just about electricity pricing-it is a litmus test of how India’s audit conscience keeps pace with its fiscal risks.

(This is an opinion piece, and views expressed are those of the author only)

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