Power utility CESC reported a net profit of Rs 199 crore for the year ended March 31 but only after resorting to a clever accounting trick to blunt the impact of a Rs 998-crore additional coal levy that would have otherwise left it wallowing in its first-ever loss in over a decade.
The levy arises from a Supreme Court verdict last September that overturned coal block allocations dating back to 1994 and sought to gouge a part of the economic gains that private mining entities have made over the years.
The Sanjeev Goenka-owned company was forced to balance out an outgo of Rs 897 crore - treated as an exceptional item in the profit and loss account - by taking credit for a similar amount in anticipation of a favourable ruling from the state electricity regulator that would allow the power utility to recover the sum from its consumers in Calcutta and surrounding areas.
The balance Rs 101 crore, spent in the last fiscal, has been considered as fuel cost and included in the expenses. The exceptional item took into account the outgo on the levy for lifting coal from the captive Sarishatolli block between 2003 and March 31, 2014.
"In terms of the provisions of the Coal Mines (Special Provisions) Ordinance 2014... inter-alia, payment of the aforesaid sum was necessitated and a demand has been raised on the company by the Competent Authority for the payment of Rs 996 crore, which has been fully paid and the balance sum will be duly settled in terms of the appropriate order/legislations," a note in the company's profit & loss account said.
"Considering the above payment, being in the form of levy, a portion of the levy amounting to Rs 897 crore, relatable to the period since inception up to March 31, 2014, has been shown as exceptional item and an amount of Rs 101 crore for 2014-15 has been included in the fuel cost.
"The total amount of Rs 998 crore is directly relatable to the underlying fuel sourced for the company's embedded generation and, hence, considered recoverable by way of tariff in terms of the applicable laws for which a reference has since been made to the West Bengal Electricity Regulatory Commission," the note said.
The court had imposed an additional levy of Rs 295 per tonne on all entities that received coal blocks through the screening committees after 1993. For CESC, the figure worked out to Rs 1,047 crore.
Sources said other utilities selling electricity in a licensed area may seek tariff order. The tariff in Calcutta may go up by Rs 0.90 a unit if the WBSERC agrees to the CESC petition.