16 Apr 2012 Hindustan Times (Chandigarh)

Gurpreet Singh Nibber
Autonomy eludes power corpns

Losses mount as PSPCL, PSTCL increasingly dependent on state government
CHANDIGARH: The two corporations formed after unbundling of the Punjab State Electricity Board ( PSEB) are two- year- old today, but both are yet to find their feet. The basic purpose of unbundling — autonomous functioning — seems to have been defeated as the duo is more dependent on the state government than before.

Both the Punjab State Power Corporation Limited ( PSPCL) and Punjab State Transmission Corporation Limited ( PSTCL) are not only state- owned but also state- controlled. The Memorandum of Article and Memorandum of Association of these corporations is also silent on the crucial aspect of autonomy.

St at e e l e c t r i c i t y boards across the country were creat e d under t he El e c t r i c i t y Supply Act, 1948; its Section 79 empowered them to take i ndependent decisi ons pertaining to recruitment, power generation and distribution and fixing the cost of power a nd e moluments fo r i t s employees.

In 2003, Parliament passed a new Electricity Act to restructure power boards on corporate lines. However, the new corporations have been reduced to government departments with increased political and bureaucratic interference.

Power engineers’ association president HS Bedi s ays, “Unbundling was never a solution. It was just a requirement of the Electricity Act, 2003. Throughout the country, states are combining power corporations. As per the Act, the newlyfo r med corporation s hould have corporate governance. Where is the corporate culture? We continue t o work l i ke an extension of the state government.”
FISCAL HEALTH WORSENS

In March 2010, prior to unbundling, the PSEB’S accumulated commercial losses were Rs 9,713 crore. On March 31, 2012, these had swelled to Rs 12,800 crore.

The reasons for unbundling state electricity boards were failing f i nancial health and increasing subsidy bill on the state, regarded as an obstacle to private investment.

The National Electricity Policy f ramed under the Electricity Act, 2003, provided that for financial sustainability, state governments would need to off- load liabilities to ensure successor companies were not burdened. In Punjab, however, the PSEB was unbundled without taking over past liabilities and giving any financial aid.

At the time of unbundling of their state electricity boards, the Gujarat government pledged to give Rs 15,352 crore and Uttar Pradesh gave Rs 31,300 crore by writing off state government loans. But Punjab adjusted Rs 540 crore of outstanding loan against subsidy payable to the PSPCL.

FRP MISSING

A financial restructuring plan ( FRP) prior to unbundling is mandatory for the smooth functioning of the newlyformed power corporations. Since unbundling in Punjab was done in haste, it was decided to prepare the FRP at a later stage.

Two years still awaited.