The PHD Chamber of Commerce and Industry has strongly criticised the Punjab government for its decision to give free supply of electricity to the agriculture sector.
In a recent note submitted to the state government, the chamber has expressed the view that the governments decision to supply free electricity to the farmers has ruined the financial viability of the Punjab State Electricity Board (PSEB).Highlighting the role of the power sector in achieving the industrial growth rate of 12 per cent, envisaged in the new industrial policy of the state government, the chamber has stressed the need for the augmentation of generation capacity, strengthening the transmission and distribution system, besides serving the consumers to their maximum satisfaction.
The chamber has appreciated the state government for giving top priority to the power sector by allocating Rs 795 crores in the annual plan of 1997-98. But the chamber has also emphasised that in order to transform Punjab into a kind of a model state in the country, restoring the credibility of the power sector can not be compromised for generating internal resources for expansion and modernisation.
Adequate, reliable and competitively priced power to the industrial sector will neutralise to a good extent the disadvantages of Punjabs location, away from the ports and the important centres of raw materials and marketing within the country, the chamber states in its detailed note.
The chamber has pointed out that in order to meet the growing demand for power in the next 10 years, an additional 4,000 mw generation capacity is necessary and an investment of more than Rs 16,000 crores is required to match the demand. In view of the constraints to fund an investment of this magnitude, an imaginative investment friendly policy to encourage private sector investment in generation projects is the need of the hour.
Commenting on the state of different power projects in the state, the chamber has mentioned that in order to ensure an early completion of the 420 mw Bhatinda III thermal station, additional funding is necessary and participation by an overseas partner can really help in completing the project on schedule. The PHDCCI has regretted that the PSEB and the Indian Oil Corporation, which had signed a MoU in January 1996 for the Bhatinda fuel based power station have failed to sign the commercial agreement so far to implement the project. In order to improve the power situation in the state, the chamber has suggested that the plant load factor of the thermal stations should be augmented.
It has also suggested that an emergency programme for the rehabilitation of transmission and distribution system should be formulated to minimise line losses and improve quality of power supply. The PSEB should allocate sufficient funds for the purpose as this investment will lead to tapping lost revenue.
In the chambers view, on an experimental basis, the PSEB should offer distribution of power to a joint sector company with majority stake of power sector in one or two of the circles to begin with and the performance of the company should be a benchmark for the PSEB too.
The chamber has stressed the need for commercial orientation for improving the functioning of the PSEB. Only a commercially viable electricity board will be in a position to generate internal resources and raise funds from external agencies, including the World Bank for setting up generation projects, augmenting transmission and distribution system in order to meet the growth in demand of power of 10 per cent per annum,.
The chamber has appreciated the power sector reforms undertaken by the neighbouring Haryana, which has also plainly refused to succumb to the pressure both by the opposition parties as well as the farmers to supply free electricity to the agriculture sector on the Punjab pattern. The chamber highlights that the Haryana government has succeeded in securing a World Bank loan of $600 million by implementing the necessary reforms in the power sector.
The chamber has mentioned that the PSEB, which is currently incurring a loss of Rs 50 crores every month, will suffer an additional loss of Rs 1,000 crores annually for supplying electricity free of cost to the agriculture sector in the state.
