The Punjab State Power Corporation Limited (PSPCL) has accused the state government of working against the provisions of the Companies Act, by making book adjustment of Rs. 405.73-crore subsidy to the agricultural sector. It has asked the government to roll back the move.
Having failed to get the money, the PSPCL is unable to declare the dividend under the Companies Act, though it has registered a profit of Rs. 200 crore in 2012-13, almost after a decade.
Overall, the PSPCL is facing an accumulated loss of Rs. 1,700 crore since the Punjab State Electricity Board (PSEB) was divided into PSPCL and PSTCL in 2010.
In a letter to the power secretary, HS Chaudhary, financial adviser to the PSPCL, has written that as the state government had failed to pay the PSPCL Rs. 405.73 crore, as per the Companies Act, the PSPCL could not declare that it had accumulated loss in the last three financial years.
The book adjustment of subsidy is not only against the Companies Act but also against the power regulator directions, which bind the government to pay the subsidy amount in cash, says the letter.
Power engineers, under the banner of the PSEB Engineers Association, have also opposed adjustment of the subsidy amount. In the last financial year, the government had made a book adjustment of Rs. 952 crore for return of equity. Power engineers have also challenged the practice before the power regulator saying when the PSPCL is in losses, there should be no return of equity.
In view of the position explained above and the legal position regarding declaration of dividend as per the Companies Act, the state government is requested to withdraw the book adjustment of return of equity of Rs. 405.73 crore against the subsidy payable to the PSPCL during 2012-13, the letter said.
How PSPCL fared since 2010
Year Rs. (in crore)
2010-11 (loss) 1,639
2011-12 (loss) 333
2012-13 (estimated profit) 200
Accumulated loss 1,772