Fledgling power corporation down in the dumps
Jangveer Singh
Tribune News Service

Chandigarh, June 3
The fledgling Punjab State Power Corporation Limited is down in the dumps as the state government as adjusted Rs 981 crore towards subsidy payable to the electricity utility on account of free power to the farm sector.

This move will effectively wipe out any benefit accruing to the corporation due to the recent tariff hike, expected to mop up an additional revenue of Rs 1,325 crore during 2010-11.

The state government has committed to the Punjab State Electricity Regulatory Commission that it will pay a subsidy of Rs 4,188 crore to the power corporation on account of free power being supplied to agriculture consumers and subsidised power to below poverty line consumers.

The state has queered the pitch for the corporation already finding it difficult to raise fresh loans with its accumulated losses crossing Rs 12,000 crore. In a letter issued on May 24, it had adjusted Rs 981 crore in a paper transaction against tax-free bonds issued by it under a one-time settlement scheme implemented in 2003. The scheme was formulated with the idea of clearing outstanding dues payable by state electricity boards to central public sector undertakings like the NTPC, NHPC and Coal India Limited.

The one-time settlement came into effect with the state signing a tripartite agreement with the Centre and the RBI, with the government assuming all liabilities. The state issued bonds against a total Punjab State Electricity Board liability of Rs 637 crore. Now the state government has claimed the principal amount from the power corporation as well as the interest paid on these bonds for seven years.

This has been done despite the fact that the corporation in its order in 2004 had rejected the petition of the state government to pass on the burden of tax bonds to consumers and ruled that the government itself should own this liability.

An expert group constituted by the corporation had advised that this liability be taken over by the government and discharged from the general revenue.

This is not the first time that the government has made paper adjustment to deny subsidy committed to the PSEB earlier and now the power corporation.

In April this year it tried to adust Rs 739 crore towards subsidy payable to the corporation, claiming the Bhakra Beas Management Board (BBMB) power being supplied to the corporation was the state government’s share. This notification was, however, withdrawn.