PSPCL on verge of bankruptcy
Umesh Dewan
Tribune News Service

Patiala, December 28
The state government has miserably failed to bail out the Punjab State Power Corporation Limited (PSPCL) from the debt-trap. As a result, the outstanding loans against the corporation has witnessed a drastic increase from Rs 12,093.44 crore in 2007-08 to an estimated Rs 15,171.34 crore in 2009-10.

Documents procured by The Tribune reveal that at present, the corporation is on the verge of bankruptcy.

Notably, following the directives of the Reserve Bank of India (RBI) in October this year restricting loans to the state power distribution companies that are exceeding losses to the tune of Rs 5,000 crore, several financial institutions and banks had stopped disbursing short-term loans to the Punjab power corporation.

The financial crisis in the PSPCL could be gauged from the fact that till December 1, 2011, the PSPCL had failed to clear the payment of the supplier of equipment/material to the tune of Rs 82.66 crore.

Though, the exact amount of the loan pending against the PSPCL for 2011-12 is yet to be worked out, but it is learnt that presently, the total debt towards the PSPCL stands at approximately Rs 11,000 crore.

As per the documents, between April and November this year, the PSPCL had availed Rs 2,450 crore from some financial institutions and banks, while during the same period a repayment of Rs 4,150 crore was made by the PSPCL to clear the pending loans.

"The PSPCL is taking short-term loans to repay the previous pending loans. Instead of clearing the bills of the material/equipment suppliers, the funds are being diverted to meet the fund requirement for the salaries of the staff and the pension benefits", revealed a senior PSPCL official, preferring anonymity.

On April 16, 2010, the state government had bifurcated the erstwhile Punjab State Electricity Board (PSEB) and two new power companies — Punjab State Power Corporation Limited (PSPCL) and Punjab State Transmission Corporation Limited (PSTCL) — came into existence. At that time, the PSEB was under debt of approximately Rs 8,000 crore and the technocrats had requested the state government to prepare a roadmap to improve the fiscal condition of the power corporation.

However, till date the state government has not done anything for the financial restructuring of the power corporation.

Expressing his views on the matter, senior power sector expert Padamjit Singh said that it was the duty of the state government to give financial support to the new power companies.

He further said, "It is extremely unfortunate that despite assurance that the state government would provide the financial restructuring plan to the power corporation, in order to bail out the PSPCL from debt-trap, nothing has been done till date in this regard."

Punjab Power Secretary Anirudh Tiwari said, "The government has hired consultants and I am holding regular meetings with them. Actually, this involves a lot of work, right from the re-evaluation of the assets to the distribution of the assets between the two power companies and preparing new balance sheets. Hopefully, I will receive the first draft of the financial restructuring plan by January end next year."

Punjab Chief Secretary SC Agarwal said, "We are giving finishing touch to the financial restructuring plan."