The Punjab state electricity regulatory commission (PSERC) has issued notice to the Punjab government on its move to adjust return on equity in power subsidy to be given to Punjab State Power Corporation Limited (PSPCL).
Admitting a petition by retired electricity board engineer Gurnek Brar, the power regulator has asked the state government and the PSPCL for replies by June 4. It will hear the petition on June 11. Brar has objected to the Punjab government's decision to adjust return on equity against power subsidy that the government gives to the power corporation in lieu of free electricity to the agriculture sector and below poverty line (BPL) families.
The adjustment of return on equity against cash subsidy amounts to a dividend of 15.5% on the equity to the state government. However, the PSPCL, which is under losses already, cannot be required to give a dividend to the equity holder, the petitioner has said, seeking that the state government be a give a month to submit the unpaid subsidy for the years 2011-12 and 2012-13, amounting to Rs. 304.46 crore and Rs. 412.39 crore, respectively.
Before the commission every year, the Punjab government commits to making the full payment of subsidy but on March 28, 2013, the joint secretary (finance) had proposed that for the year 2012-13, the return on equity of Rs. 405.73 crore was to be adjusted against subsidy.
In its tariff order for the year 2009-10, the PSERC had stated that the return-on-equity was payable to the owner only if the utility was in profit and the amount was available. "In a situation where the PSPCL has made huge losses, the question of paying return on equity to the government does not arise,” it had stated.
In case the state government goes ahead and adjusts the return on equity in the subsidy for 2012-13, there is every chance of its doing it in the current financial year as well, fears Brar.