Govt, PSEB lose out for not unbundling
Gurpreet Singh Nibber
PATIALA:

The Punjab State Electricity Board and the Punjab government are pay- ing a heavy price for the delay in unbundling of the power board.
Funding agencies such as the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) -- func- tioning under the Union power ministry -- are denying finan- cial assistance to PSEB as it is still a single entity.

Officials say a huge amount of untapped funds could be gen- erated in case PSEB unbun- dles. Even the scope of raising funds would increase. "Now funding agencies consider PSEB as one entity, while after unbundling, separate compa- nies can individually generate the same amount of funds as PSEB is generating," sources said. The state government has been putting off unbundling of PSEB on one pretext or the other since 2004. The Electricity Act 2003 had asked state power boards to unbundle within a year. The essence of the Act is to separate the power trading utility. The Punjab government is hesitant to implement it and has sought extension on February 15 for another two months.

PFC and REC offer working capital loans of Rs 300-400 crore for purchase of coal for thermal plants, power purchase and servicing other needs.

After unbundling, PSEB offi- cials are hopeful of a higher credit limit from banks and financial institutions. At pres- ent PSEB's total credit limit is Rs 70 crore.

Giving the example of Haryana, which has four com- panies, an official pointed that the neighbouring state has four times more chances to raise funds. As per Reserve Bank of India guidelines, PFC can offer 20 per cent of its total net worth (Rs 2,500 crore) as loans to power companies. In the unbun- dled scenario, each company in Punjab can avail Rs 500- crore loans.

Also, PSEB is considered a grade-II rating company by banks and financial institutions because it is in heavy losses.
As a result, it is required to pay 0.5 pc more interest on loans.

Unbundling would also give clean balance sheets to the board. PSEB is facing accu- mulated losses of Rs 1,200 crore and projected loan liability of Rs 20,000 crore by the end of this financial year.