Subsidised power ate into PSPCL profits

Aman Sood

Patiala, December 30

Punjab State Power Corporation Limited (PSPCL) is at present suffering a loss of over Rs 1,880 crore in contrast to a profit of Rs 1,069 crore it generated in March 2022. Following populist schemes and escalating cost of coal in addition to the inability on part of the successive governments to clear subsidy amounts, PSPCL is raising loans to meet expenditures.

PSPCL has sought a short-term loan twice this financial year amounting to Rs 1,500 crore. The state has intimated PSPCL that it will pay Rs 15,845 crore of power subsidy for the current year. Subsidy, however, is likely to cross Rs 17,500 crore given the recent populist schemes of the government.

Slips from A+ to B grade

• Punjab State Power Corporation Limited (PSPCL) has slipped this year to ‘B’ grade from its ‘A’ grade last year as per the 10th annual ranking report for the 2020-21 financial year
• Experts said the ranking went a long way in putting forth the state Power Department’s demand to the Centre for the release of more grants to the state
• “The lower the ranking, the more difficult it becomes for the state power utilities to put forth a demand for more and new financial aid,” they said
• The national-level rating of the PSPCL, which was B+ for 2016-17, improved to A+ (top ranking) in 2018-19
• The PSPCL is placed 16th in the current ranking

Senior officials confirm that restricted payments by the state government has forced the cash-strapped PSPCL to again seek a loan of Rs 1,500 crore to meet its daily expenses and avoid “restrictions imposed by the Central Government on defaulters, who fail to clear power purchase bills within the stipulated time”.

“It is a vicious cycle for us. In case we fail to clear the bills of power producers, the penalty is around 18 per cent as interest on bills submitted. Therefore, it is feasible to raise loans at 7 to 8 per cent from banks and save that 10 per cent payable to power producers as interest,” said a top PSPCL official.

Notified in June, the national power grid operator can now ban states from buying or selling electricity from the spot market and also levy penalty for not clearing their dues to the power generators.

“This is the first time that the Power System Operation Corporation, which operates the grid under the aegis of the Power Ministry, has invoked the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, to penalise the defaulting states by disallowing them to buy electricity from alternative short-term sources,” claimed power experts.

Meanwhile, as per data collected by Punjab State Power Corporation Limited (PSPCL), the number of zero bill domestic consumers for the month of December, collected till December 24, has gone up to 90.07 per cent.

The records show that till December 22, there were 27.52 lakh billed consumers in Punjab out of which 26.94 lakh fell in the subsidised category. Out of them, a total of 24.79 lakh consumers availed zero bill facility, accounting for 90.07 per cent of the total domestic consumers in the state.

Various other categories of subsidised domestic consumers, including below poverty line, freedom fighters and SC/STs has reached 97.9 per cent.

If one looks at the actual monthly subsidy for the past four months from August to November, it’s somewhere between Rs 522 to 732 crore. The average monthly bill works out to be Rs 645 crore.