Non-payment of cash subsidy by state has led to high AT&C losses, which is violation of Ujwal Discom Assurance Yojana norms

PATIALA : The Centre has warned the Punjab State Power Corporation Limited (PSPCL) that it will not get funds from the Rural Electrification Corporation (REC) and the Power Finance Corporation (PFC) if its aggregate technical & commercial (AT&C) losses go beyond 15%.

The corporation has asked the Punjab government to release the subsidy bill in cash, as the “book adjustments” have increased its AT&C losses, which will lead to non-availability of funds from the REC and PFC. Though the PSPCL has cut its transmission losses, due to non payment of cash subsidy, the commercial losses have gone up, which is violation of the Ujwal Discom Assurance Yojana (UDAY). The memorandum of understanding (MoU) under UDAY was signed by the Punjab government, PSPCL and the Centre in 2016. In the tripartite MOU, it was committed that PSPCL will reduce AT&C losses from 16.66% in 2014-15 to 14% by 2018-19 in order to improve its operational and financial efficiency to bring about a financial turnaround.

However, due to receipt of less subsidy, there was a decline in corporation’s revenue collection efficiency, which resulted in higher AT&C losses, which were

15.90% in 2015-15, 14.46% in 2016-17 and 17.26 % in 2017-18.

As per a letter written by PSPCL chairman-cum-managing director (CMD) Baldev Singh Sran to Punjab power secretary A Venu Prasad, had the corporation received full subsidy from the state government, the AT&C losses for 2015-16, 2016-17 and 2017-18 would have been 12.38%, 12.34 % and 11.85%, respectively.

Such lower losses would not have only met the UDAY targets, but also surpassed these, the CMD noted in the letter. “The Union power ministry has warned that for utilities with AT&C losses more than 15%, funds from PFC & REC may not be available. Further, high AT&C losses result into lower rating of PSPCL, leading to charging of higher interest rate by lending agencies,” he added.

Observing that the Punjab government has to pay Rs 13,718 crore subsidy in 2018-19, the CMD said it has so far paid only Rs 4,515 crore in cash, while book adjustments of Rs 2,649 crore were made in lieu of the electricity duty, UDAY interests etc, leaving a shortfall of Rs 4,132 crore out of Rs 10,289 crore subsidy bill till December 10. He also pointed out in the letter that if the government fails to release the subsidy arrears, as per the UDAY MoU, it has to fund the losses in future.

The PSPCL management has asked the power secretary to take up the issue with the state government for early release of subsidy. Meanwhile, former PSPCL power engineer Padamjit Singh said the trend of book adjustment of subsidy is wrong. “The government is violating the orders by not making cash subsidy payments,” he said, adding that he will challenge this trend before the regulator to save the corporation and consumers.