 "UDAY implentation in Punjab slowed down due to elections")
The financial restructuring of Punjab State Power Corporation (PSPCL) under UDAY (Ujjwal Discom Assurance Yojna) may get delayed as the poll bound state is reluctant to take politically tough decisions such as raising tariffs and cracking down on power theft.
Assembly elections in Punjab are expected early next year and introducing reforms in the ailing PSPCL can be more damaging than rewarding for the ruling Akali-BJP alliance.
Punjab is one of the 18 states to have joined centre’s flagship UDAY scheme for the revival of the distressed power discoms.
A senior official in Punjab Government told Business Standard as per the agreement that the state Government had taken over the 75% of the debt of PSPCL that costs Rs 15,628 cr.
The state government has already issued bonds worth Rs 15,069 cr and second tranche of bonds valued Rs 559 cr is underway. Bonds for remaining 25% of total debt will be issued by PSPCL on its own.
But the power utilities is hard pressed under outstanding dues from government departments and Punjab Government.
Different departments of Punjab Government owe more than Rs 500 cr to PSPCL. The official told that discussions were on with the Finance Department to find a solution to settle this amount but final decision is yet to come.
Punjab Government also owes Rs 1,200 cr of power subsidy of last financial year to PSPCL. Agriculture connections constitute the largest segment of beneficiary of discounted power besides below poverty line users.
The annual power subsidy bill of Punjab government is Rs 5,400 cr.
The more serious concern for power reforms in Punjab is tariff revision that has been withheld by the Badal Government in the wake of upcoming assembly elections.
As per the tri-partite agreement between Government of India, Punjab Government and PSPCL, state has to revise power tariff by 5% and 9% in the financial years 2016-17 and 2017-18 respectively, besides hike for another year.
There has been no tariff hike in 2015-16 and in 2014-15 it was increased by a meager 2.74%.
The official apprised that they have sent a proposal for tariff revision to Punjab State Electricity Regulatory Commission and were awaiting the tariff order but tacitly agreed that political bosses may refrain from any such move to safeguard their political interests.
The difference between ARR (Average Revenue Requirement) and AC (Average cost of Power) is between 10%-15%, this can be bridged only by increasing the price of power charged from the consumers added the official.
Punjab is also suffering on account of over assessment of power consumption and is now surplus by 5,000-6,000 Mw of power for 8 months in a year. The power consumption curve in the state is a bell shaped curve. State is self-sufficient in power for 4 months and is surplus rest of the year. The total power generation capacity of state is 10,500 Mw.
“We expected the demand to grow by 10% y-o-y so created huge capacities but during last 3-4 years the demand registered an increase of only 2%-3% so our estimates went wrong”, he informed.
On asking about high cost of tariff to the industry (it costs Rs7-8 per unit) as compared to other states, he said that cost of power generation is higher in Punjab due to distance from the source of coal. “But we have now offered power @ Rs 4.99 per unit to the fresh investments in Punjab to compete with other states”.
The staff strength has also been reduced in last to 40,000 from 70,000 few years back to minimise manpower cost.
The Transmission and Distribution losses for year 2016-17 have been projected to be 16.16% and this would be gradually contained at 14% by 2019-2020.
There is no plan for privatisation of discom in near future, he confirmed.
| Total Debt to be restructured under Uday | Rs 20,838 cr |
| Annual Power subsidy bill | Rs 5,400 cr |
| Punjab Govt's outstanding payment dues to PSPCL on power subsidy | Rs 1,200 cr |
| Dues of Punjab Govt departments towards PSPCL | Rs 500 cr |
| Installed power generation capacity | 10,500 Mw |
| Surplus Power (8 months in a year) | 5,000-6,000 Mw |
| Last tariff Revision | 2014-15 (2.74%) |
| Difference between AC and ARR | 10%-15% |
| T&D losses | 16.16% (projected for 2016-17) |
