Nothing in it for PSPCL, still in red

DECKS CLEARED FOR TARIFF HIKE AS GOVT COMMITS R5,100 CR TO PSPCL TO MAKE UP FOR FREE POWER SUPPLY

CHANDIGARH: The annual budget for the financial year 2012-13 announced by finance minister Parminder Singh Dhindsa has no proposal to bail out the debtridden Punjab State Power Corporation Ltd (PSPCL).

Even in the third year of the unbundling of the Punjab State Electricity Board, the PSPCL, which deals with power generation and distribution, continues to reel under severe fund crunch to the extent that banks and financial institutions have refused to come to its aid. The corporation is still awaiting the financial restructuring plan.

Despite the fact that the PSPCL faces accumulated losses to the tune of Rs 11,000 crore and working capital loans of Rs 10,000 crore, the government has not announced any special package to bail out the corporation.

Ignoring the worsening financial health of the PSPCL, the state government is continuing with the populist scheme of giving free power to the agriculture sector and certain sections of the society. It has committed a sum of Rs 5,100 crore to the PSPCL to make up for the free power supply. The government will also foot the electricity bills of an estimated 7.5 lakh tubewells in the state.
With Dhindsa's announcement, decks have been cleared for the hike in power tariff, which was delayed by months because the state government had not decided on the amount to be given to the PSPCL in lieu of free power.

Despite the demands for doing away with the free power policy, which has led the PSPCL to bankruptcy, and instead of ensuring uninterrupted power, the state government is continuing with free power, which was introduced in 1996 when the then Congress government led by Rajinder Kaur Bhattal had announced free power to farmers owning less than 5 acres of land.

After coming to power in 1997, the Parkash Singh Badalled SAD-BJP government continued with the scheme, which was discontinued for three years (2004-07) by the Congress government led by Capt Amarinder Singh.

Interestingly, the quantum of subsidy announced by the finance minister is tentatively Rs 600 crore less than what the Punjab State Electricity Regulatory Commission (PRERC) had calculated. The PSERC, which is busy finalising the annual tariff for year 201213, will decide on the hike after receiving a communication from the state government on the amount it would extend to the PSPCL for supply of free power.

In the last financial year, the subsidy was Rs 4,200 crore, out of which Rs 3,270 crore was paid and the remaining amount was adjusted against surety bonds given by the state government to the PSPCL.