PSPCL asks govt to pay subsidy in cash
Vishal Rambani
PATIALA:

NOT IN KIND Rejects `adjustment' of Rs 981 cr through tax-saving bonds
Upset at the “bonded adjustment“ of Rs 981 crore payable for subsidy on account of free power to the farm sector, the cash-strapped Punjab State Power Corporation Limited (PSPCL) has urged the Punjab government to pay the subsidy in cash, failing which power supply could be affected during the paddy season.
The amount has been adjusted on account of tax-free bonds (8.5% interest) issued in 200304 by the state government under the one-time settlement scheme of the Centre.
Contrary to the written undertaking given to the Punjab State Electricity Regulatory Commission (PSERC), the state government has not paid the subsidy in cash.
In the tariff order for 2011-12, PSERC had directed the government to pay subsidy of Rs 4,188.92 crore to PSPCL for free power. It was further directed by PSERC that this subsidy should be paid in monthly instalments of Rs 349 crore.
The government move has dashed PSPCL's hopes, which was targeting an additional revenue of Rs 1,325 crore though tariff hike.
Earlier, the government adjusted its entire loan amount of Rs 3,075 crore against subsidy, forcing PSPCL to borrow heavily from the market and increasing its working capital loan from Rs 2,275 crore (till March 31, 2007) to Rs 9,500 crore (till March 31, 2011.
In a letter to the government, PSPCL has written, “It is contrary to PSERC directions and the government's commitment.
PSPCL is already under heavy debt, and if this paper adjustment is not taken back, the corporation won't be able to repay loans and pay for electricity purchase, coal and freight charges.
This can disturb power supply to farmers in the paddy season.“ “We are already reeling under debt and need cash for day-today functioning and power purchases. I am hoping that the government will understand our viewpoint to ensure smooth working of the corporation and supply of power to paddy farmers,“ said KD Chaudhry, PSPCL chairman-cum-managing director.
The PSEB Engineers Association has decided to approach PSERC over the issue.
Association president HS Bedi said, “Such paper transactions will make the power utility's accumulated losses cross Rs 12,000 crore. Banks will be reluctant to give more loans to PSPCL. We have decided to approach the regulatory body to save PSPCL from becoming bankrupt.“