Cheap power a dream as PSPCL fights financial crunch

Aman Sood

Tribune News Service

Patiala, January 10

Over five years after the state government declared that the Punjab State Power Corporation Limited (PSPCL) was “power surplus”, cheap power remains a distant dream.

PSPCL is fighting a severe financial crunch owing to power subsidies, default in payment of power bills by government departments and payment of coal washing charges to private power plants.

Power rates for domestic consumers in Punjab are now the highest in the northern region and municipal tax, cow cess, increased electricity duty and social security surcharge on power bills have added to the woes.

States which collect more than Punjab from power consumers are Maharashtra, Bihar and Telangana.

“The power generation cost is almost the same across the country but Punjab fares poorly in terms of bringing power cost down as it has fixed charges to pay to private sector thermal plants and sustain itself on loans due to the failure of the government in clearing subsidy on time,” alleges former chief engineer with the erstwhile PSEB Padamjit Singh.

Solar power is the costliest for every state and the average rate exceeds Rs 8 per unit. The cost of thermal power is around Rs 3 per unit and hydropower is less than Re 1 per unit. However, taxes and costlier purchase impact final rates, making it impossible for Punjab to lower the rates.

Consumers in Punjab, a power-surplus state after privatisation of generation, have to bear the brunt.

Due to a lopsided policy of the state, surplus power has become a headache for the PSPCL. It is saddled with surplus power capacity linked to generation-based power purchase agreement (PPA).

“The amount PSPCL needs to pay to private developers towards deemed generation is over Rs 3,000 crore even without getting a unit of power. This burden is passed on to consumers in the annual tariff order issued by Punjab State Electricity Regulatory Commission,” says All India Power Engineers Federation spokesperson VK Gupta.

With the coming up of three private sector thermal plants in the state, the adverse implications of surplus power have already come to the fore as the plant load factor of state sector thermal plants has already dipped to abnormally low levels. All three state-owned thermal plants of the PSPCL with a capacity of 2,640 mega watt (MW) will remain under shutdown during most part of the year.

“The radical and irreversible changes were made in Punjab when power generation policy was introduced in June 2010 and opened the floodgates to private power companies. The setting up of thermal plants was allowed under the MoU route and not competitive bidding,” said Gupta.

It is for the private power developer to assess the demand before setting up a power plant and take on the risk of finding a market for its power. The PPA format with a deemed generation clause was meant largely for the public sector companies as both the generating companies and the distributing utilities were in the public sector.

Tariff structure

Punjab is becoming a state with one of the highest tariffs in the country. The average tariff for domestic consumers comes out to be roughly Rs 7.41 per unit with an additional 36 paise per unit added recently.

Many states which are usually buying power to meet their demand are still charging less than Punjab. These include Assam at Rs 7.25 per unit, UP at Rs 7 per unit plus Rs 110/KW, Bihar at Rs 40/KW plus Rs 7.50 per unit, Chhattisgarh Rs 4.85 per KWH as fixed charges plus Rs 2.45 per unit, Gujarat Rs 70 per month fixed charges plus Rs 4.90 per unit, Haryana Rs 7.10 per unit, Tamil Nadu Rs 6.60 per unit, Orissa Rs 5,70 per unit and HP Rs. 5.45 per unit. Power rates in Maharashtra are Rs 13.66 per unit; in Andhra Pradesh, Rs 9.05; in Telangana, Rs 9.50 per unit; in Kerala, Rs 7.90 per unit; in West Bengal, Rs 8.92 per unit; in Delhi, Rs 250 plus Rs 8 per unit; in Karnataka, Rs 7.90 per unit plus Rs 150 per month as fixed charges.

Pending subsidy figures

Annual revenue needs of the PSPCL stand at Rs 32,327 crore, while its income is expected to be Rs 31,762 crore, leaving a gap of Rs 564 crore during the current fiscal. In addition, there is also a carry forward of the subsidies from the previous years which takes the total amount to Rs 14,972 crore to be paid by the state government to the power corporation. Out of this, Rs 9,897.84 was due to be paid by November 30. After a recent SC verdict, the PSPCL ended up paying Rs 1,420 crore to two power plants. This amount has to be paid as had been agreed in the power purchase agreements signed between the state and the power plants.

The PSPCL pays Rs 1,500 crore per annum as salary while pensioners account for Rs 2,064 crore a year. The PSPCL is yet to recover Rs 2,300 crore from both the government and private consumers with Rs 1,200 crore outstanding against various government departments.

“Since the power purchase agreements were done many years back, we are doing the best we can to bring power rates down by curtailing transmission and distribution losses. The maximum demand during the paddy season is 14,600 MW while the average demand during the season is 12,000-13,500 MW. The demand during the rest of the period drops down to 6,000 MW during the day and 3,000 MW during the night,” said Baldev Singh Sran, CMD, PSPCL.

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