Subsidy delayed, PSPCL borrows Rs 800 cr to avoid defaulter tag

Tribune News Service

Aman Sood

Patiala, January 31

The populist free power subsidy scheme and delayed payments in lieu of that has made the cash-strapped Punjab State Power Corporation Limited (PSPCL) to go for loans to meet expenses. In the first month of 2024, the PSPCL has taken a loan of Rs 800 crore to meet its statutory financial requirements, mostly due to political compulsions.

Information gathered from PSPCL sources reveal that the government has paid a subsidy of Rs 15,821 crore due till December 31, 2023. However, the government delayed the payment of subsidy and paid the full amount only on December 29, which ideally should have been paid in advance.

In January, of the total subsidy bill of Rs 1,730 crore due for January 2024, only Rs 1,300 crore has been paid, of which Rs 500 crore were paid today. “This leaves a gap of Rs 430 crore which is still pending,” said officials.

“The fact of the matter is that the PSPCL has to take additional loans of Rs 800 crore in January 2024 to avoid default in payment of power purchase and other statutory payments,” confirmed a top PSPCL official privy to the developments. “Loans have to be taken for payment of power purchase cost, coal cost, railway freight and other unavoidable expenditures,” said the official preferring anonymity.

In addition to the delay in subsidy amount for free power, sources said that the PSPCL could have avoided any further loans in case the government departments cleared the pending amount of around Rs 3,300 crore. “If the four government departments, including the Department of Local Government (Rs 1,300 cr), Rural Development and Pachayats (Rs 1,000 cr), Water Supply and Sanitation (Rs 700 cr) and Health Department (Rs 150 cr), had cleared dues, then the PSPCL could have avoided any more loans this year,” they said.

Senior officials confirm that restricted payments by the state government has forced the cash-strapped PSPCL to seek loans to meet its daily expenses and avoid ‘restrictions imposed by the Centre on defaulters, who fail to clear power purchase bills within the stipulated time’.

“It is a vicious cycle for us. In case, we fail to clear the bills of power producers, the penalty is around 18 per cent interest on bills submitted. Therefore, it is feasible to raise loans at 7-8 per cent from banks and save that 10 per cent payable to power producers as interest,” said a top PSPCL official. "We recently managed to clear Rs 750 crore taken last year, and now again have taken loan to manage ourselves", added the official.

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