Subsidy account, interest charges pushing up rates
Jangveer Singh/TNS

Chandigarh, July 16
An ever-burgeoning subsidy account, that has risen to Rs 5, 784 crore, the increased cost of power purchase and interest charges on loans taken by Punjab State Power Corporation Limited (PSPCL) have made power rates in Punjab one of the most expensive in the country.

The subsidy to be paid to the PSPCL on account of free power to farmers to run their tubewells and the limited free power supply to Scheduled Castes and below poverty line families has been on the increase since 2008. This subsidy amount, which was Rs 2,000 crore in 2008, has jumped to Rs 5,784 crore now. It was Rs 2,600 crore in 2009, Rs 3,140 crore in 2,010 and Rs 4,257 crore in 2011.

The PSPCL is facing problems because the Punjab Government does not pay timely subsidy to it. Moreover, it is in the habit of making paper adjustments against cash spent by the power utility to supply power to farmers. This year too subsidy arrears of Rs 273 crore for 2011-12 have been carried forward. Besides lack of timely payment of subsidy, sources fear that power losses are also transferred into the subsidy account. This is because the agriculture subsidy is calculated on 10 per cent of the supply that is metered.

Punjab State Electricity Regulatory Commission chairperson Romila Dubey when asked if power theft could also be adjusted in the subsidy amount, remarked: “To some extent, you must be right.” She, however, said it was not possible to meter the entire agriculture load. Dubey said power consumption allowed by the commission had increased from 10,843 million units allowed last year to 11,003 million units this year. Sources said this was mainly because of the increase in tub wells with the state fixing a target of 40,000 new connections this year.

The employee cost is also responsible for the frequent tariff hike. Despite the unbundling of the electricity board into two corporations, the new power utilities have failed to decrease the employee cost. Against an employee cost of Rs 2,916 crore allowed in the 2011-12-tariff order, the PSPCL had filed for an employee cost of Rs 3,629 crore. The regulatory commission has allowed Rs 3,213 crore in its present tariff order.The PSPCL has cut down power purchase only marginally despite a two-year effort to make banking arrangements in advance. Against the approved power purchase of Rs 5751 crore in 2011-12, the utility proposed a Rs 5,608 crore power purchase this year. It has, however, been allowed only Rs 5,110 crore.

Equally worrying is the increase in the interest charges being paid by the power utility on loans taken by it.

Against the approved interest charges of Rs 1,066 crore allowed in 2011-12, the utility proposed interest charges of Rs 2,300 crore for this year. It has been allowed Rs 1,423 crore in this year’s tariff order.