Indian utilities fear losses after IFRS transition

India’s state electricity boards are warning of huge potential losses as a result of the shift to international financial reporting standards (IFRS) in April.

The losses are expected as a result of the way regulatory assets are disclosed under IFRS compared with India’s existing Indian Gaap. The latter allows energy companies to recognise rate-regulated assets and liabilities such as tariffs, fuel adjustments and advances against depreciation on their
balance sheets.

Under IFRS, these assets or liabilities will be charged to the profit and loss account when they occur. This change will affect power companies worldwide, but India’s giant utilities have been particularly vocal in their protests.

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