State fails to reimburse amount to PSPCL; pushes the Powercom to the threshold of financial crisis
DW Bureau | Chandigarh
The cash-strapped and debt-ridden Punjab government has failed in its obligation to reimburse the state power utility (Punjab State Power Corporation Ltd) an amount of Rs 4,964 crore till March 31, 2018 on account of power subsidy to various categories of consumers, including farmers. So far, the Government does not appear to have enough cash flow to make good similar obligation amounting to Rs 7,696 crore in 2018-19, sources said.
PSPCL chairman A Venu Prasad confirmed that the State Government owed around Rs 5,000 crore to the Power Corporation on account of power subsidy. Besides, the State has to give around Rs 7,700 crore to the Powercom in the financial year
2018-19. “We have asked the Government to make the committed reimbursement at the earliest,” Prasad informed.
Principal Secretary (Finance) Anirudh Tiwari told Daily World that the Government was seized of the matter. “We have made a provision of Rs 12,950 crore in this year’s budget and entire amount including Rs 5,000 crore balance amount from the last year will be reimbursed to the PSPCL,” he stated.
Sources said that the Government’s failure in fulfilling its guarantee for the past few years has started adversely impacting the liquidity position of the PSPCL which finds itself in deep financial mess and it was able to disburse the salary for March with great difficulty in the second half of April. It is a grim scenario for the PSPCL as it has itself piled up a state government guaranteed debt of Rs 31,000 crore, with an interest burden of around Rs 3,000 crore per annum. Such is the poor financial health of the corporation that it is finding exceedingly difficult to make payments to its employees on account of salary and wages (Rs 180 crore per month) and pensions (Rs 160 crore per month), they informed.
A senior PSPCL official said that the Government had clearly violated the provisions of Section 65 of the Electricity Act — a Central legislation — by not fulfilling its guarantee for the past few years. Since the Government still owes over Rs 5,000 crore to the State power corporation, giving guarantee for this year’s subsidy could be challenged by the Punjab State Electricity Regulatory Commission (PSERC).
The PSERC, which passes the statutory tariff order after obtaining a solemn commitment from the state finance department on account of subsidy, cannot be just a mute
spectator. “It is duty bound in the interest of all stakeholders to enforce its own tariff order,” a government officer argued.