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Charge from farmers if Punjab govt fails to pay subsidy, says regulator

In three years, the subsidy bill in Punjab has swollen to Rs 13,718 crore — 10% of its annual budget.

punjab Updated: Jun 12, 2018 10:42 IST
Vishal Rambani
The subsidy bill has swollen to ₹13,718 crore (from 2016-17 to 2018-19), which is more than 10% of the annual budget of the state.
The subsidy bill has swollen to ₹13,718 crore (from 2016-17 to 2018-19), which is more than 10% of the annual budget of the state.(For representative)

With the Punjab government failing to pay advance power subsidy in lieu of free power to farmers and subsidised power to the industry, Punjab State Electricity Regulatory Commission (PSERC) has directed Punjab State Power Corporation Limited (PSPCL) to start charging from beneficiaries in case of default in disbursement of subsidy.

The power regulator allowed the PSPCL to charge the applicable tariff from respective subsidised category consumers (farmers, BPL families, Scheduled Caste and industry) if the government fails to disburse the entire subsidy as per its tariff order of April 19.

Also read | The Great Free Power Debate: Subsidise farming, not farmers, say experts

The subsidy bill has swollen to Rs 13,718 crore (from 2016-17 to 2018-19), which is more than 10% of the annual budget of the state. Free power to farmers and subsidised power to industry was the main poll promise of the Congress in the run up to the 2017 assembly elections.

The order came on a petition filed by former chief engineer of the erstwhile Punjab State Electricity Board Padamjit Singh. The petition mentions that the subsidy default of 2016-17 fiscal to be paid upfront in 2017-18 as subsidy is by law an advance payment that cannot be carried forward to the next year.

The PSERC noted that there is a shortfall of payment by the government on account of subsidy for financial year 2016-17 and 2017-18. The subsidy payable as on March 31, 2017, was Rs 2918.67 crore which has now shot up to Rs 4,768.65 crore as on March 31, 2018. The government had informed the commission that its financial position is not good.

“The Punjab government’s submission that payment of interest takes care of the delay in the payment is not appropriate as such defaults violate Section 65 of the Electricity Act, 2003. This also is affecting the income of the PSPCL and its ability to pay salaries to staff and expenditure related to repair and maintenance and power purchase. Moreover, the utility is unable to raise working capital loans over and above the limit prescribed under the Ujwal Discom Assurance Yojana (UDAY),” the PSERC order stated.

The order says: “Default of payment on account of subsidy affects the credibility of the utility before the banks/financial institutions. The PSPCL is a utility fully owned, controlled and managed by the Punjab government and it becomes even more imperative for the state government to release the subsidy amount on time.”

In its tariff order, the PSERC has calculated the total subsidy requirement of Rs 13,718 crore for 2018-19 and the directed Punjab government to pay advance monthly subsidy of Rs 1,143 crore per month by the 1st day of each month. Yet, the PSPCL has received subsidy of only Rs 213 crore for the month of April this year.