Fiscal shock for Power Corp
PSPCL has no funds even to pay for used coal, railway freight
Umesh Dewan/TNS
Patiala, September 23

Seventeen months after the bifurcation of the cash-strapped Punjab State Electricity Board (PSEB) into two power utilities, the claims made by the Punjab Government that the unbundling would improve the fiscal health of the new bodies have fallen flat.

For, the two utilities, the Punjab State Power Corporation Limited (PSPCL) and the Punjab State Transmission Corporation Limited (PSTCL), have been at present facing one of the worst-ever financial crisis. So much so that the PSPCL does not have funds to even make payments for coal, railway freight and electricity purchased from other sources.

Already running into loses amounting to thousands of crores, the recent denial of loans by banks to the PSPCL has left the Power Corporation authorities worried. The plea for fresh loans was turned down after the Reserve Bank of India issued fresh guidelines regarding providing loans to power companies that were into losses.

On April 16 last year, the state government had bifurcated the erstwhile PSEB. The PSEB was under a debt of approximately Rs 8,000 crore at that time. Then as well, the power sector experts had appealed the state government to prepare a roadmap for improving the fiscal condition of the Power Corporation, but nothing concrete has been done till date. Padamjit Singh, an expert in the field, said the demand that post-unbundling the new power utilities should be given a clean balance sheet and that the state government should take care of the accumulated losses had not been accepted till date.

"And what’s making things worse is that the state government is, in sheer violation of the Punjab State Electricity Regulatory Commission (PSERC) instructions, still not releasing the full amount of the monthly advance payment for power subsidy (Rs 394.08 crore) to the PSPCL," he said.

PSEB Engineers' Association president HS Bedi said one way to improve the fiscal health of the Power Corporation was that the state government should infuse some equity to bail the PSPCL out from the debt trap.

PSPCL’s Chief Managing Director KD Chaudhri claimed that they had got a government guarantee and were hopeful of getting loans from banks. "I think the present financial crunch should be over by next month. As far as the stopping of payments is concerned, it’s no big issue as the Power Corporation will clear them by October." Also, he told the Power Corporation staff not to be panicky as “their salaries would be disbursed on time”.

Compounding the Worries
The Punjab Government is, in sheer violation of the Punjab State Electricity Regulatory Commission instructions, not releasing the full amount of the monthly advance payment for power subsidy (Rs 394.08 crore)

What Power Corp CMD says
“Financial crunch should be over by next month. As far as the stopping of payments is concerned, it's no big issue as the Power Corporation will clear them by October” — KD Chaudhri