UP Power Corporation Limited (UPPCL) is reeling under a greater financial deficit than it has been projecting for years.
The UP Electricity Regulatory Commission (UPERC) has discovered that the UPPCL had been showing a narrower gap in its expected revenue and expenditure in the annual revenue requirement proposals (ARRs) filed between 2001-02 and 2007-08.
This happened as a result of ARRs being filed without auditing the balance sheet. Now that the balance sheets for six years have been audited, the additional loss is pegged at a staggering Rs. 26,000 crore.
On the order of the appellate tribunal for electricity early this year, the UPERC insisted on the UPPCL submitting audited balance sheets for the years in which it submitted ARRs and proposed tariff hike.
“We have found the UPPCL should have shown its annual deficit more than it did every year. Simply put, it failed to propose adequate tariff hikes to bridge over the revenue-expenditure gap,” said a source.
Now, the UPERC may have to adjust this amount in tariff orders to be issued by the regulator in years to come.
The already whopping amount may get bigger as UPPCL files audited balance sheets for the remaining years, the source added.
On its part, the UPPCL may be more than eager to propose higher tariffs to make up for the ‘past losses’, the source said.
The corporation is left with an annual deficit of around Rs. 6000- 7000 crore. Going by the ARRs submitted to the UPERC for the last three years, the UPPCL’s cumulative losses are more than Rs. 20,000 crore in just three years. Presently, the corporation is facing a financial crisis of such proportions that even banks are refusing to give loan to it. The corporation is struggling to purchase power and pay salaries to its staff. “We spend around Rs. 18,000 crore on purchase and salaries etc every month against total revenue of Rs. 1200- 1300 crore,” said a senior UPPCL official.
“Now, we are anxiously looking to the UPERC issuing the tariff order to help the corporation get some additional revenue from revised rates,” he added.