Power corpn in debt trap as govt defaults

Aman Sood

Tribune News Service

Patiala, February 25

The much-hyped power sector reforms and subsidy to various sectors, including farming, have come at a cost for the Punjab State Power Corporation Limited (PSPCL) — an estimated loan of Rs 17,277 crore.

The PSPCL is now caught in a debt trap, with major expansion and development works suffering due to paucity of funds. The roughly Rs 25,000-crore company is managing itself on more and more loans. The reason: the state government’s inability to clear the pending bills for the subsidy it provides to agriculture consumers and below poverty line/reserved category consumers.

The total estimated loan against PSPCL for the next financial year stands at Rs 17,277 crore. The total long-term loan is Rs 5,767 crore and the interest payable on it is Rs 731 crore. The loan against working capital is Rs 9,860 crore and the interest payable on long-term loans is Rs 720 crore. The total interest payable by the PSPCL is Rs 1,705 crore. The interest on security deposits is Rs 180 crore.

The working capital loan is taken for the running of thermal and hydropower stations, which include fuel cost, operation, and maintenance cost spares and receivables. The subsidy amount for the current financial year payable by the

Punjab Government is Rs 16,400 crore. Of this, the subsidy amount of Rs 10,621 crore is for 2020-21 and the last year’s arrears are Rs. 5,779 crore.

On a pro-rata basis, the subsidy payable till February 15 was Rs 15,014 crore. While the Punjab Government has paid Rs 7,099 crore in cash and after adjustment of electricity duty and infrastructure development fund amount of Rs 1,671 crore, there is a shortfall of Rs 6,446 crore. The balance subsidy payable up to March 1 is about Rs 7,850 crore.

The government took a major part of PSPCL loans under the UDAI scheme. After adjusting UDAI bond interest of Rs 1,306 crore and a guarantee fee of 38.75 crore, the balance subsidy payable to PSPCL in the current financial year will be about Rs 6,500 crore.

Meanwhile, the total defaulting amount of Rs 2,381 crore is due from various government departments. The defaulting amount due from various government departments and electricity subsidy exceeds Rs 8,600 crore as of today.

“The credibility of PSPCL suffers as it has to take short-term loans for its day-to-day expenses after the state government fails to pay timely subsidy as required by the Punjab State Electricity Regulatory Commission (PSERC) tariff order every year. The banks and other commercial institutions charge a slightly higher rate of interest keeping in view the financial status of PSPCL,” says VK Gupta, spokesperson, All India Power Engineers Federation (AIPEF).

“Only when government confirms to pay subsidy, the tariff ARR order is issued. Even though government gives written confirmation to PSERC, it defaults and thus the PSPCL suffers,” claimed a senior PSPCL official.