Power Corp caught fudging financial record

Ruchika M Khanna

Tribune News Service

Chandigarh, January 31

After being lauded for bringing about financial turnaround of the loss-making Punjab State Power Corporation Limited (PSPCL), the power utility’s management has now been accused of fudging records to show the corporation a profitable venture.

Rather than earning a profit of Rs260 crore, as claimed by the management, the power corporation allegedly suffered a loss of Rs153 crore in the 2012-13 financial year.

The “anomaly” in balance sheets has been pointed out by a statutory auditor appointed by the Comptroller and Auditor General (CAG) for auditing the PSPCL’s accounts.

The auditor, a Chandigarh-based firm, found that the corporation had, in the balance sheets submitted to Punjab State Electricity Regulator Commission (PSERC), allegedly overstated its profit by Rs248.12 crore. The liability, on the other hand, was “understated” by Rs166.16 crore. Instead of earning Rs260.54 crore profit, the PSPCL, thus, was found to have suffered a loss of Rs153.74 crore. The audit report is also available on the PSERC’s website.

The PSPCL chairman-cum-managing director, KD Chowdhary, denied any fudging was done. “No anomaly has been pointed out in the final report of the CAG. The fact is the PSPCL made a profit of Rs260 crore in 2012-13 and Rs256 crore in the subsequent year. Even in 2014-15, inspite of the PSERC’s unilateral decision on the method for calculating agricultural subsidy, we will be showing a profit of Rs170 crore,” he said.

Chowdhary claimed the corporation’s financial turnaround had been recognised nationally. But the auditor has alleged that there was an overstatement. Citing examples, the report mentions that the profit was allegedly overstated by Rs27.59 crore due to wrong capitalisation of interest, amount recoverable from the PSTCL was overstated by Rs16.34 crore, sale of power understated by Rs39.40 crore, profit overstated by Rs8.44 crore due to various charges of coal and profit overstated by Rs44.63 crore due to non-accounting of liability for terminal benefits of employees.

It also points out that the profit was “overstated” by Rs197 crore as arrears of pay and allowances, which had not been provided. The profit was allegedly overstated by Rs9.72 crore due to bloated depreciation, shows the report.

Officials in the PSPCL’s finance department cited different standards of accounting followed by the corporation and the chartered accounts for the discrepancies. “Our standards are the same as that of the Punjab government. For example, the discrepancy in payment of pay arrears has been accounted for in three years — 2010-13 — when the actual arrears have been paid. We follow the policy of actual payments while settling the accounts rather than showing all expenditure under a head in a single year when the expenditure is decided,” they said.

Baldev Singh Sra, PSEB Engineers Association president, said the profits claimed by the PSPCL over the last three financial years were due to “excessive” tariff hikes. “In the last four financial years, the power regulator has allowed for a hike that has added Rs6,550 crore in the corporation’s kitty. Comparatively, in eight years before 2010, the total hike allowed was Rs3,175 crore,” he said.

Sra claimed the figures proved that PSPCL’s efficiency had hardly improved. “The profit that has been shown is on account of the high tariff hike or the extra charges imposed on industrial consumers for getting power under the open access policy,” he said.

Reacting to this, top PSPCL officials maintained that the power hike was allowed by the PSERC only to factor in the inflation and the increase in salary bills after the Fifth Pay Commission was implemented. “The salary bill has increased from Rs1,800 crore to Rs4,000 crore per annum after the pay revision. The profits are coming only through improved efficiency,” said Chowdhary.