Delay in payment of subsidy PSEB asks panel to approve interest expenses
Jangveer Singh
Tribune News Service

Chandigarh, January 1
The Punjab State Electricity Board (PSEB) has now asked the Punjab State Electricity Regulatory Commission (PSERC) to approve the interest expenses incurred by it on raising loans for working capital requirements due to delayed payment of subsidy by the state government.

The PSEB has made this request while submitting the tariff as well as annual revenue receipt (ARR) application to the Commission on December 29.

The board had intimated the commission that the government was to pay a subsidy of Rs 2,601 crore to the board in advance quarterly instalments. It said this payment had been delayed and the board had received only Rs 1,640 crore out of the total due subsidy.

The PSEB has also submitted that the government has recalled overdue loans of Rs 1,362 crore after adjusting it against subsidy on February 29, 2008. It said because of this it had to pass on the requisite subsidy to the consumers and had to take short-term loans to finance it. The submission said though the board had tried to convert the short-term borrowings to long-term loans by inviting tenders, the response was not up to the mark due to the present market conditions. The board had asked that the commisison allow carrying cost of this loan as per actuals.

The board had also requested the regulatory commission to allow additional interest cost on account of non-payment of refund of excess interest of Rs 501 crore by the government as it needed more time to convert this into a long-term loan.

Meanwhile, the PSEB has failed to comply with the orders of the Commission to pay subsidy quotient of Rs 2,601 crore in advance in equal quarterly instalments. The government had given the board only Rs 1,000 crore as subsidy at the beginning of the third quarter and following this it gave the Board Rs 320 crore in November and December.

If the government continues with this policy of making monthly payments, the board will get the complete subsidy amount only till March 31 ensuring it has to again raise funds for working capital requirements and then approach the commission to allow it to approve the subsequent interest expenses.

KK Singla, chief engineer, commercial, when questioned on the issue, maintained that the government was obliged to give the entire subsidy amount to the board till the closure of the financial year that it March 31, even though para 6.8.8 of the tariff order of 2008-09 released by the Regulatory Commission stipulates that this is to be done in four equal quarterly instalments.

The tariff order also stipulates that the board is to submit a status report of the payment of subsidy and interest within the first fortnight of each quarter