Audit Negates Govt Version On Cesc Profit

In what could be the most important disclosure yet for R P Goenka-controlled power utility CESC Ltd, figures certified by S R Batliboi and Co, the firm appointed by the state government to audit the companys accounts, show that its actual clear profits were lower than that permitted by a whopping Rs 160 crore for the period 1993-94 to 1995-96.

This negates the power departments claim that CESC made excess profits than legally permitted and, therefore, had to refund excess monies to the consumers. The refund figure being talked about was around Rs 100 crore.

The figures tell a different story. In fact, according to the certified figures, the company, even if allowed to bill the full fuel cost, would still be short by Rs 11 crore.

 

The Batliboi report, submitted recently, is expected to form the basis of the final recommendations of D K Bose committee.

Under the Electricity (Supply) Act, the clear profits a power utility makes cannot exceed what is called the reasonable return. The shortfall can only be to the extent of the penalty levied on T&D losses. In CESCs case, it has been found for the three years in question that the clear profits were far lower than that permitted.

According to the figures available, the clear profits for the three years were at Rs 205 crore, including a Rs 97 crore fuel surcharge arrears component yet to be billed. The actual clear profits, therefore, were Rs 108 crore (Rs 205 crore less Rs 97 crore).

The reasonable return calculated for CESC came up to Rs 268 crore for the three years, leaving an actual shortfall of Rs 160 crore (Rs 268 crore less clear profits of Rs 108 crore).

Accounting for a T&D penalty, pegged at Rs 26 crore for the three years, the shortfall works out to Rs 134 crore.

The power utility is expected to make a pitch to be allowed to collect its full fuel surcharge arrears, of Rs 123 crore, for the three years, which would still leave a shortfall of Rs 11 crore.

How the state power department compensates CESC for this is the issue which is expected to agitate the corporate sector in Calcutta in the coming days.

CESCs point is expected to be that it be allowed to collect the entire Rs 123 crore, and not just Rs 97 crore, and the T&D penalty not be levied again. This is so, since an excess penalty had already been levied on the company, as is reflected in the reasonable return-clear profits shortfall. But even after accounting for that, a Rs 11 crore gap still remains.