PSPCL under Rs 1,000-crore loan as govt falters in paying for free power
The failure of Punjab government to keep its promise of paying subsidy amount in lieu of free power being given to farmers has forced the Punjab State Power Corporation Ltd (PSPCL) to burden itself with a Rs1,000-crore loan in the last one-and-half months to pay salaries and meet other day-to-day expenses.punjab Updated: Mar 13, 2016 21:07 IST
The failure of Punjab government to keep its promise of paying subsidy amount in lieu of free power being given to farmers has forced the Punjab State Power Corporation Ltd (PSPCL) to burden itself with a Rs1,000-crore loan in the last one-and-half months to pay salaries and meet other day-to-day expenses.
The SAD-BJP coalition government has been providing free power to the agriculture sector and had promised to compensate the PSPCL for this.
As per Power Regulator Tariff order for 2015-16, the state government was to pay a subsidy amount of Rs 5,599 crore to the PSPCL. This payment was to be made in advance monthly instalments, thus as per agreement, Punjab had to clear the full subsidy amount for 2015-16 by March 1.
As per the latest subsidy statement of the PSPCL, the actual subsidy payment up to March 1, 2016, stood at Rs4,400 crore, which meant the state government was yet to pay Rs 1,200 crore to the power corporation.
Due to non-payment of subsidy amount, the power corporation was forced to take loan as it was short of working Capital. “The power corporation has taken a loan of Rs 500 crore in February and Rs 500 crore in the first week of March to clear salaries. However, our finances are still in a mess and need more money immediately to clear bills,” said an official from PSPCL management, requesting anonymity.
The official said if the government didn’t clear pending subsidy bills soon, the PSPCL would have to take more loans. “The govt pays subsidy amount after much delay and then PSPCL has to take loans, upon which it pays tax. It is double whammy for us,” said the official.
Pertinently, the government had in writing committed itself to timely payment of the subsidy payment, and it was the sole basis that PSERC had incorporated free supply provision in its order and finalised the tariff for 2015-16.
In addition, the state government had signed a pact with the Union power ministry under the Uday scheme under which it was supposed to take care of debt of the PSPCL. However, the power corporation has not even been paid subsidy amount of Rs 1,200 crore by the state government.
The PSPCL engineers had objected to the delay in paying subsidy amount on government’s part. As per earlier practices, the Punjab government used to adjust Rs 1,000 crore as ‘return of equity’ in the PSPCL in lieu of free power.
PSPCL director finance Subhash Arora said they had taken up the issue with the Punjab government and were hoping that funds would be released soon.