PSPCL is in debt trap due to non payment of cash subsidy in lieu of free power .
Punjab State Power Corporation Limited (PSPCL) fears debt trap as the state government has failed to give cash subsidy for free power.
PSERC in its tariff order for 2011-12 has directed the Punjab Government to pay Rs. 4188.92 crore for free power to a group of consumers with a monthly installment of rs.349.08 crore. Punjab Government paid monthly installment of Rs. 190 crore for April and May and Rs. 282.69 crore per month for subsequent months. Punjab government also adjusted Rs. 981.93 crore on account of power bonds issued long back to NTPC for its outstanding dues.
After the election in Punjab in last week of December the state government has not paid any subsidy to PSPCL. The financial position of Punjab is so bad that bills of more than 2200 crore are pending with treasuries. The finance department has shown its inability to pay pending subsidy of 978 crore.
The policy of free power to agriculture sector, SC/ ST families and last to be added in the list is BPL families is being followed by state government. Despite the commitment of state government to PSERC to pay cash subsidy in advance every month the state falters every year. It makes book adjustment in lieu of cash subsidy pushing PSPCL in to debt trap.
It is an open secret that PSPCL is under debt trap because of the free power .Even PSERC can be held responsible for PSPCL financial position as it disallows genuine expenditure.
The petition of Gurnek Brar regarding nonpayment of cash subsidy by government was dismissed by PSERC .He appealed to Appellate tribunal against this. Appellate Tribunal has reserved its judgment on this last week.