PSPCL profits only on paper as subsidy burden mounts
Power corporation earns ₹2, 685 cr profit between April and September, govt owes it ₹6,000 crore against subsidies
Running its own coal mine and making optimal use of its power plants, the Punjab State Power Corporation Limited (PSPCL) has earned a profit of ₹2, 685 crore for the period ending September 2024 (April to September) as compared to ₹564 crore during the corresponding period last year.
Despite the profit, PSPCL remains in poor financial straits, having to float short-term loans to meet day-to-day expenses, as the Punjab government has been faltering on reimbursing it for the power subsidies being given to domestic, agricultural and industrial users. The Punjab government owes PSPCL a whopping ₹6,000 crore (till December 2024).
Presenting its half-yearly results, PSPCL stated the cost of generation in its Ropar, Lehra Mohabbat, and Goindwal thermal plants was reduced by ₹300 crore by bringing down the production cost by 35 paise per unit with the use of cheaper coal from the Pachhwara coal mine.
Similarly, the employee costs also came down by ₹320 crore compared to last year when it had to pay sixth pay commission arrears. Besides, the total power sales for the industrial, agricultural, domestic, and commercial sectors increased from 32,955 to 37,493 MUs (4,538 MUs, i.e., 14%). Agricultural, domestic, and commercial consumption increased due to high temperatures during the summer season and lesser monsoon rains.
The increase in tariff for FY 2024-25 by 1.59% also resulted in an increase in PSPCL’s revenue. “Overall, the impact of the increase in sales and tariff resulted in an enhancement of revenue by ₹1,400 crore. Improved financial health resulted in a reduction of long-term loans from ₹20,163 crore to ₹18,593 crore, i.e., by ₹1,568 crore,” said a PSPCL management official.
The increase in agricultural, domestic, and industrial consumption by 20%, 11%, and 11%, respectively, resulted in a ₹2,291 crore jump in subsidies from ₹10,907 crore in the period ending September 2023 to ₹13,198 crore in the period ending September 2024.
The Punjab government, which paid the full subsidy during its first two years of its rule, failed to pay the full subsidy for the first time during the current year. Till November end, it was to pay ₹4,500 crore. The figure will climb to ₹6,000 crore by December (including December subsidy).
“We are in profit, but due to non-payment of subsidy, we are floating loans to meet our day-to-day expenses. We are taking up the matter with the government, but to no avail. In October, the government paid only ₹350 crore, while in November, it paid only ₹800 crore, which forced us to float loans,” said a PSPCL official.
Despite attempts, finance minister Harpal Cheema could not be contacted for comments. However, finance department officials said the government is facing financial difficulties and won’t be able to release the full subsidy by December. The situation is expected to improve in January, they added.
