PSPCL FACES CRISIS AFTER BANKS DENY LOANS
Vishal Rambani [email protected]
PATIALA:

Following Reserve Bank of India (RBI) guidelines to tighten lending norms to power companies incurring losses, banks have denied loans to the Punjab State Power Corporation Limited (PSPCL), plunging it into deeper financial mess.
For the state power corporation, which is in the red, danger is looming large on several fronts including payment of salaries, since after denial of loans, the PSPCL has stopped payment for coal and railway freight and, partially, for power purchase bills.

After Tamil Nadu, Uttar Pradesh and Rajasthan approached the Centre for bailout packages for their distribution companies, the union power ministry asked the RBI to tighten lending norms against all power corporations under heavy debt and whose loan-repaying capacities were under question.

The PSPCL had recently taken some short-term loans to pay previous long-term loans.

The total debt of all distribution companies in the country is more than Rs. 1.5 lakh crores, prompting the Centre to write to the RBI to issue guidelines for tightening lending norms and linking them with reforms.

These guidelines have created a flutter in the PSPCL, which is coping hard to generate working capital for day-to-day operations. “We need a minimum of Rs 1,000 crore for clearing all type of payments related to power purchase, coal and freight, but banks have refused to lend money even on higher rates,“ said a PSPCL director, on condition of anonymity. “The RBI has created a problem for us and forced us to stop other payments so that we can pay salaries in time, otherwise there would be a cut on salaries.“
The Centre has also told the PSPCL to clear pending arrears of power purchase amounting to more than Rs 300 crore.

This has taken up the power puchase bill to Rs 500 crore, which will further increase till the end of this month. Apart from that, payment of coal and freight to the tune of Rs 150 crore has still not been made, while the PSPCL needs nearly Rs 300 crore to pay salaries by September 30.

Non-payment of salaries is a sensitive issue with the Punjab assembly elections barely five months away.

PSPCL chairman-cum-managing director KD Chaudhry admitted that denial of loans had created a problem for the power corporation. “We are facing a tough situation but we are working towards a solution,“ he said. “Managing the month of September is tough as after that, the power purchase bill will go down and we will even collect bills from domestic consumers for August and September, the two months when consumption remains highest.“

He, however, said employee salaries would be paid in time.

The PSPCL had approached other financial institution for loans, he said.