The power sector in Punjab started structural reforms in April 2010 with the erstwhile Punjab State Electricity Board (PSEB) being bifurcated into two entities — Punjab State Power Corporation Limited (PSPCL) and the Punjab State Transmission Corporation Limited (PSTCL). The statutory body formed on February 2, 1959, was divided into two to enhance efficiency and bring down the financial burden.

Next big reform was the state joining the Centre’s Ujwal Discom Assurance Yojana (UDAY) in May 2016. However, the picture is not rosy as eight years after the reform movement started, PSPCL’s debt stands at over Rs 32,000 crore. TOI explains why the crisis for the state’s power sector is far from over.

MOUNTING DEBT

At a time when the PSPCL joined the UDAY for the restructuring of its outstanding, its net liabilities (which were to be restructured by issuing bonds) were calculated to be around ?20,262 crore

As per the Multi-Year Tariff Petition (MYTP) for years 2017-18, 2018-19 and 2019-20, the PSPCL had projected revenue deficit of ?5,577 crore

Clubbed with a carry forward of ?5,998 crore from the previous years, it adds up to ?11,575 crore

The figure added to the liabilities of ?20,262 crore at the time of joining UDAY, brings the discom’s total debt at ?31,837 crore

The corporation is paying an interest of over ?2,368 crore per annum

SUBSIDIES TAKE BIG CHUNK

Subsidies being given by the state government to the various categories of consumers also indirectly affects the finances of the power corporation.

As on April 1, this year, there was a carry forward of ?4,769 crore of the subsidy bill, while the same for the current fiscal is ?8,949 crore, which adds up to ?13,718 crore. The money is released by the government can help the corporation bring down the amount of interest that it is paying on the loans.

While, there was a shortfall of ?1,315 crore subsidy of FY 2016-17, it rose to ?1,850 crore in FY 2017-18. As the government decided to extend the subsidies on various categories of consumers including the agricultural connections, SC and BC categories, freedom fighters and the industry, today subsidy bill of the state government is at ?8,949 crore

During the current fiscal, the PSPCL has projected 20,417 million units (MU) of surplus energy but has failed to decide what it plans to do with the extra power at its disposal. However, to reduce the burden of fixed cost of the surrendered power on the consumers of the state and to encouraging consumption of surplus power, the Punjab State Electricity Regulatory Commission (PSERC) in the tariff order for FY 2016-17 has approved the base tariff rate of ?4.99 per unit for large supply industrial category consumers besides, offering ?5.25 per unit for smaller consumers.

From its own generation, the corporation would have 4,754 MU of power from the thermals plants on which it would be spending ?2,834 crore

8,487.84 MU of power will be made available by the hydel power stations on which the PSPCL will be spending

?940.89 core

Besides, it will be buying 12,858 MU from the independent power producers (IPPs) within the state on which the corporation will be spending

?3,709 crore

A total of 41,938 MU will be bought from the Inter-State Power Purchase on which a sum of ?16,743 crore would be spent

In total, the corporation will have 52,607 MU at its disposal on which a total sum of ?19,069 crore will be spent during the current fiscal

The corporation will also be spending ?1,240 crore on the transmission and other transfer charges for buying power from sources outside the state

As per these calculations, the pooled cost of power turns out to be ?3.96 per unit.

While, there was a proposal to sell the extra power to Pakistan, but no concrete decision on this has been taken so far. PSPCL chairman-cummanaging director (CMD) A Venu Prasad said since the matter involved two countries, the decision in this regard can be taken only at the highest level. He said corporation can provide a linkage with the nearest point on the border from where power can be supplied to Pakistan.

WHY PUNJAB DEFIES LAW OF DEMAND AND SUPPLY?

Despite being a power surplus state, Punjab continues to defy the law of supply and demand which determines the unit price of an item in all markets across the world by applying the logic of ‘more the supply, less is the price’.

The per unit cost of power in Punjab now stands between ?5.06 to ?7.33 per unit, which the highest amongst all northern states.

As of today, Punjab has a total installed capacity of 8,722 MW of power including 6,560 MW of fuel-based units and 1,162 MW of renewable sources.

According to the sources in the Power Corporation, increase in power tariffs in Punjab is inevitable due to the high working capital of the PSPCL and the employee cost. The corporation will be spending ?19,069 crore on power purchase and will be spending ?2,368 crore on payment of interests. The employee cost is also ?4,845 crore, which forces the power corporation to keep the power cost high.

EARNING?

Last fiscal, the PSPCL expected a revenue generation of ?27,142 crore

However, its net revenue requirement was ?32,719 crore, which left a gap of ?5,576 crore

In current fiscal it has a revenue requirement of ?32,487 crore

Its projected revenue is ?30,771 crore, thus a gap of ?669 crore