PSPCL’s power purchase cost doubles in 3 years | punjab$patiala | Hindustan Times
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PSPCL’s power purchase cost doubles in 3 years

For a state that is not shy of ‘advertising’ its power-surplus status and even claims to have excess to sell, two recent developments in the sector directly contradict the assertion. The Punjab State Power Corporation Limited (PSPCL), the state’s power generation and distribution utility, will pay Rs 14,000 crore as its own purchase cost-double the Rs 7,200 crore-it paid three years ago in 2012-13. PSPCL has also petitioned the regulator for allowing a 20% hike in tariff, claiming that it needs the amount as its cost of operations has increased by Rs 5,140 crore over previous fiscal.

punjab Updated: Dec 26, 2015 09:47 IST
Vishal Rambani
Even as the absolute cost of the power purchased has doubled over three years, the percentage of ‘shortfall’ this year has also risen to 64% of requirement as listed out in the ARR — from 44% in 2012-13.
Even as the absolute cost of the power purchased has doubled over three years, the percentage of ‘shortfall’ this year has also risen to 64% of requirement as listed out in the ARR — from 44% in 2012-13.(Livemint photo)

For a state that is not shy of ‘advertising’ its power-surplus status and even claims to have excess to sell, two recent developments in the sector directly contradict the assertion. The Punjab State Power Corporation Limited (PSPCL), the state’s power generation and distribution utility, will pay Rs 14,000 crore as its own purchase cost-double the Rs 7,200 crore-it paid three years ago in 2012-13. PSPCL has also petitioned the regulator for allowing a 20% hike in tariff, claiming that it needs the amount as its cost of operations has increased by Rs 5,140 crore over previous fiscal.

Both the facts and the operational shortfall figure have been gleaned from a reading of the recent Annual Revenue Requirement (ARR) petition that the PSPCL has filed before the regulator, the Punjab State Electricity Regulatory Commission (PSERC). An ARR lists out the broad financial parameters of any utility.

‘64% of requirement bought from outside’

Even as the absolute cost of the power purchased has doubled over three years, the percentage of ‘shortfall’ this year has also risen to 64% of requirement as listed out in the ARR — from 44% in 2012-13. Last year, the utility paid Rs 11,500 cr (52% of the ARR). So, what has led to the sudden cost spurt for the utility?

“There has been no new power generation by the public sector in recent years. With the PSPCL failing to get lower-priced coal from its captive coal mine in Jharkhand, the utility is purchasing imported coal from a private player like Adani at exorbitant rates. With the tender to explore PSPCL’s coal mine unlikely to be granted soon, PSPCL is set to face a period of financial stress,” a source said, not wishing to be named.

‘Government owes utility Rs 6,533 crore’

The PSPCL has told the regulator that that Punjab government has to pay Rs 6,533 crore to it in lieu of free power provided to the agricultural sector and other beneficiaries (this amount has been calculated on the presumption that the regulator would accepts the proposal for 20% hike).

On the expense side, the PSPCL’s petition claims that it has to pay about `2,700 crore a year to the three private sector Independent Power Producers (IPPs) in the state — Rajpura, Talwandi and Sri Goindwal-if the state’s power demand falls below a certain level without getting even a single unit of power in return.

This financial year, of the total requirement of 50,000 million units, the three thermal plants — other hydel sources and even the Bhakra Beas Management Board (BBMB) — would meet only around 36% of the requirement at 18,300 million units.

The remaining requirement would be met from outside at the higher cost. The regulator will now invite objections to the PSPCL proposals before it takes a decision.

What is the problem?

1. Even as the absolute cost of the power purchased has doubled over three years to `14,000 crore from `7,200 crore in 2012-13; critically, the percentage of ‘shortfall’ this year has also risen to 64% of the power requirement as listed out in the Annual Revenue Requirement petition before the regulator

2. There has been no new power generation by the public sector in recent years, a source has claimed, adding that with the PSPCL failing to get lower-priced coal from its captive coal mine in Jharkhand, the utility is purchasing imported coal from a private player like Adani at exorbitant rates