Fund-starved Punjab State Power Corporation Limited (PSPCL) is in for another hurdle over fixed charges payable to power generators and fixed charges receivable from industrial consumers, as in absence of clarity other state consumers can end up paying the charges against the Electricity Act.

Now, the Centre has asked power utilities in all states are under obligation to pay capacity charges as per power purchase agreements (PPA).

On April 2, PSPCL had invoked force majeure conditions curtailing of power from 1,980-MW Talwandi Sabo, 1,400-MW Rajpura and 540-MW Goindwal thermal stations and other generation plants following load crash in the state after the declaration of lockdown in the country to save paying fixed charges. PSPCL was expecting to save Rs 600 crore of fixed charges in the month of April as daily saving is around Rs 20 crore.

V K Gupta, a spokesperson of All India Power Engineers Federation (AIPEF), said now Ministry of Power has added another dimension to this as it has written a letter on March 6 to all state governments and other stakeholders that power utilities are under obligation to pay capacity charges as per power purchase agreements (PPA). The obligation to pay for power within 45 days of presentation the bill remains unchanged.

This has put a question mark on the ability of PSPCL to not to pay fixed charges under force majeure conditions. The Punjab government issued an order on March 7 exempting fixed charges for medium supply and large supply industrial consumers  for the next two months from March 23 and energy charges may be fixed to commensurate with the reduction in fixed charges.

The government gave directions to Punjab State Electricity Regulatory Commission (PSERC) under Section 108 of the Electricity Act 2003.

Gupta said medium and large supply industry will be saving at least Rs 180 crore during two months period on account of non-payment of fixed charges. “Under lockdown conditions as the industry will remain under shut down so there will be no energy charges and PSPCL is all set to lose more than Rs 700 crore for the month of April,” he said.

As per rules, government directions to the commissions are to be implemented as long as they are not in conflict with substantive provisions of the Act.

“Moreover, it violates the spirit behind fixed charges and further makes it difficult for PSPCL to meet its fixed charges like salaries, interest payments, etc. Unless the government gives subsidy for the exempted fixed charges, the fixed charges of the industry shall shift over to other consumers which will be against the provisions of the Section 65 of the Electricity Act, 2003. The default in subsidy payment by Punjab government to PSPCL as of March 31, 2020 is Rs 5,577.98 crore,” said a top PSPCL official.