PSPCL in trouble as govt holds back subsidies for free power to farm sector
The government’s failure to pay subsidy to the Punjab State Power Corporation Limited (PSPCL) to make good its free power promise to the agriculture sector is draining the coffers of the corporation.
Not paid the subsidy for the last five fiscals, PSPCL is taking loans from banks to survive. It has as of now taken a loan of ₹500 crore and is planning to apply again for ₹ 260 crore as demand peaks in summer.
According to information available with Hindustan Times, till June 15, out of the ₹3,923 crore subsidy it had to pay, the Punjab government gave ₹1,840 crore in cash to PSPCL.
“Both PSPCL and Punjab Government are in a vicious circle over subsidy and interest payment. In the recent tariff order, the power regulator has imposed ₹418 crore interest on the Punjab government for delayed/partial payment of subsidy to PSPCL. At the same time, due to non-payment of full subsidy, PSPCL is taking loans to meet its expenses and paying interest to banks. Both PSPCL and Punjab government are paying interest, but ultimately this money comes from the pocket of the public”, said a power engineer who did not wish to be named.
What the government will do about this year’s bill of ₹16,400 crore amid the Covid-19 pandemic is anybody’s guess.
When contacted, A Venu Prasad, chairman-cum-managing director (CMD), PSPCL, said the corporation was getting a much better amount in subsidy than in previous years, but it was “not enough” as most of PSPCL’s power was purchased in summer. This meant that teh corporation had to make maximum payments during summer. “To meet the shortfall, we have take a loan of ₹500 crore and another Rs. 260 will be needed,” he added.
PSPCL gets cheap power from Grid
With power available for cheaper rates at the National Grid because of lower demand in India, PSPCL purchased 100 MW power each day on Saturday and Sunday from it. Thanks to the efforts of CMD A Venu Prasad the Northern Grid too has allowed PSPCL to import 200 MW additional power. “PSPCL is cutting down operational costs by purchasing cheap power from grid whenever possible,” Prasad said.