Govt not clearing subsidy bill, PSPCL to take ₹1,000-cr loan

PATIALA:With the state’s finance department expressing its inability to pay Rs 5,100 crore that it owes to the Punjab State Power Corporation Limited (PSPCL) on account of free power supplied to agriculture, the corporation has decided to take another loan of Rs 1,000 crore. The money will be used to make payments for coal, power purchase and settle other bills.

The whole-time directors took the decision on the logic that late payment of these bills will attract a late payment surcharge of 18%, while a loan could be availed at rates between 9% and 12%.

Officials said the power utility will float tenders for this loan, taking the total outstanding on it to Rs 30,000 crore, for which it has to pay yearly Rs 2,700 crore as interest. This fiscal, it has already borrowed 1,800 crore.

“It was decided to take some short-term loans, and some for long-term, as the PSPCL’s coffers are empty. The outstanding payments had piled up to Rs 800 crore. The delay will attract heavy penal interest on outstanding,” said a director, requesting anonymity. The director added, “Ultimately, the greater the loan burden, the more is the interest payment. This will, at some stage, be passed on to consumers.”

PSPCL chairman-cum-managing director A Venu Prasad said, “It is cheaper to take loan instead of paying surcharge at the rate of 18% for delayed and outstanding payments. We are trying to ensure that the government pays us the subsidy amount.”

He added that PSPCL had been performing well in terms of distribution, selling own power, and purchasing power at cheaper rates and losses had been cut by up to Rs 2,000 crore. In a written statement before the state electricity regulator on February 7, the state government had said that the total subsidy payable for 2017-18 was Rs 11,542 crore. Of this, Rs 2,304 crore had been adjusted through electricity duty and development fund. Another Rs 3,372 crore had already been received. After making other book adjustments, the payable amount was Rs 5,100 crore.

It is cheaper to take loan instead of paying surcharge at the rate of 18% for delayed payments. A VENU PRASAD, PSPCL MD