Govt's R1,000-cr shocker to PSPCL
Vishal Ramban
PATIALA

REACTION Power corporation CMD KD Chaudhry shoots off letter to govt, says book adjustments for subsidy uncalled for

The Punjab State Power Corporation Ltd (PSPCL) which, despite reeling under severe debt, spent additional funds to purchase electricity at higher rates to meet the power requirements for the election year for political benefits, has been refused payment of subsidy in cash by the state government, which has again made book adjustments of Rs 1,000 crore in lieu of electricity duty.
The PSPCL received an official communiqué in this regard on Sunday.

The government, which owes Rs 4,188 crore to the PSPCL for the power subsidy provided to various sections of the society, has already made book adjust

ments of nearly Rs 2,000 crore, which is against the written commitment made by it.
After making book adjustments of Rs 980 crore in May, the government, instead of paying cash subsidy of Rs 349 crore as monthly instalment for February, asked PSPCL to first adjust Rs 1,000 crore in lieu of subsidy.

The decision has come as a shock to the PSPCL management, which is already facing a severe crisis of working capital to run the corporation, which owes debts and other payments to the tune of nearly Rs 19,000 crore.

Sources said the government had asked the PSPCL to make book adjustments of Rs 1,000 crore in lieu of electricity duty.

The PSPCL, which has to pay Rs 1,400 crore annually as elec

tricity duty to the government, has paid Rs 400 crore so far.
“It is a big jolt for us as the PSPCL is reeling under debt. We are managing the finances by restructuring loans (taking new loan for payment of previous loan). I have written to the government that book adjustments for subsidy are uncalled for, especially since we are facing a severe financial crunch,” said PSPCL chairman-cum-managing director KD Chaudhry.

He said these adjustments would wipe out the gains of the recent tariff hike, which was expected to generate an additional revenue of Rs 1,325 crore in 2011-12. “We need cash to meet working capital requirements,” he emphasised.

The government has given a written undertaking to the

Punjab State Electricity Regulatory Commission (PSERC) that it would pay for the subsidy in cash while continuing with free power for the agriculture sector and subsidised power for domestic consumers belonging to the SC category and BPL families.
The PSERC had, in its tariff order for the year 2011-12, directed the government to pay a subsidy of Rs 4,188.92 crore to the PSPCL in monthly advance instalments of Rs 349 crore.

Earlier, the government had adjusted its entire loan amount of Rs 3,075 crore against subsidy.

Such paper transactions will mount the losses of the PSPCL to over Rs 19,000 crore. The problem is compounded by the fact that banks are reluctant to extend more loans to it.