In debt, PSPCL needs subsidy in cash
Vishal Rambani
PATIALA:

THE STATE GOVERNMENT IS TO PAY R6,500 CRORE IN CASH TO THE PUBLIC SECTOR UNIT

The state may be consistent with its policy of free electricity to the agriculture sector, but when it comes to paying the Punjab State Power Corporation limited (PSPCL) for the power provided, it fails to go beyond zero. The state government was to pay, in cash, Rs 6,500 crore the public-sector unit for the supply, but has resorted to accounting adjustments to settle the payment.
The corporation and its staff, grappling with shortage of funds, are not happy. They say it has defeated the very purpose of bifurcating the erstwhile Punjab State Electricity Board (PSEB) into the PSPCL and the Punjab State Transmission

Corporation Limited (PSTCL).
The aim was to divide the work of generation and distribution of electricity so that more efficiency could be achieved and, as a result, debt could be reduced.

But with the government not having paid the subsidy in cash to the PSPCL in the past five years, the debt of the corporation is now nearing Rs 16,000 crore. Since 2005, the Rs 6,500 crore the PSPCL would have got in cash, has been adjusted

against the loans, bonds and the electricity duty the corporation owed to the state government.
As a result, to manage its expenses, including the expenditure on buying the power supplied free to farmers and families below poverty line (BPL), the PSPCL has been borrowing from banks and other institutional lenders.

In fact, as per the Punjab State Electricity Regulatory Commission (PSERC), the government has to pay the subsidy amount in cash, that too in advance.

Though PSPCL chairmancum-managing director (CMD) KD Chaudhry could not be contacted, a senior official told HT on the condition of anonymity, “It’s a fact that PSPCL is under debt trap because of the free

power for which the government hasn't paid. That, plus some strict decisions of the regulator, is not allowing even our genuine expenditure of Rs 7,475 crores from 2003 onwards. The total amount thus due towards the PSPCL crosses Rs 13,000 crore. This is a reason why the PSPCL is in a debt trap.“
PSEB Engineers' Association president HS Bedi agreed, “Non-payment of subsidy in cash is main reason behind the debt. Every year, the government promises before the PSERC to pay subsidy in cash, but fails every time. We have already opposed the book adjustments. The PSERC must now take cognizance of government's failure. No company can run if it doles out services and can't get any payment.“