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Home News Power Sector News Punjab govt continues to default on payment for power subsidy

Punjab govt continues to default on payment for power subsidy

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PunjabFree supply of electricity may be a boon for farmers and other sections, and a vote-getter for politicians, but it has become a financial bane for the Punjab State Power Corporation Limited (PSPCL) which is anyway short of money. The state’s Congress regime that took power in March last year has, in its first 10 months, paid only Rs 2,500 crore of the Rs 10,600 crore due up to January this year.

This means the corporation has defaulted in paying salaries and in payment to other power utilities and for coal purchase. The government is mandated to pay Rs 950 crore per month in advance for the subsidy that the corporation bears.

The subsidy bill for the 2017-18 fiscal is Rs 11,550 crore, including a carry-forward of Rs 2,909 crore from the previous fiscal, when the SAD-BJP regime was in place except for the last two weeks.

“On payments made late for power purchase from other corporations and firms, we will have to pay 12% interest as penalty,” noted a a PSPCL management official, unwilling to be quoted for fear of government action. “Ultimately, the entire burden will be passed on to consumers in the tariff.”

He further explained, “Even if other collections made by the PSPCL for the state — such as electricity duty and infrastructure development fund — are adjusted against subsidy dues, Rs 5,010 crore remains pending.”

The PSPCL has a Rs 20,000-crore loan, which the state has committed to abut with UDAY bonds.Plus, as per the power purchase agreements signed with private thermal plants, the PSPCL is to pay Rs 8,000 crore to them for 2017-18 of the total purchase from all sources at Rs 17,000 crore.

Officials in the corporation wonder why the Punjab State Electricity Regulatory Commission (PSERC) is allowing continuation of the subsidy even when reimbursement for previous years remains pending.

The PSEB Engineers Association (named after the erstwhile Punjab State Electricity Board or PSEB) will now hold protest meetings at the Patiala head office and at all zonal offices and thermal plants against non-payment of salary for January. “It is unheard of in the history of the corporations that salary has not been disbursed by the end of the month,” claimed Sanjiv Sood, the association president.

“The PSPCL management has failed to take proactive measures, particularly to get subsidy released from the state government as per the tariff order under the Electricity Act,” he said, adding, “Costly power purchase from private thermal plants — and releasing payments on priority to them — is leading to worsening of the financial position.”

He declared that during the protests the association will provide more details to expose the “misdeeds that have led to a financial crunch and an unfair burden on consumers”.


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