AAP’s decision on free 300 units of electricity to every household in Punjab puts PSPCL in catch-22 situation

The Aam Aadmi Party’s announcement to provide 300 units of electricity free of cost to every household in Punjab has put the Punjab State Power Corporation Limited (PSPCL) in a catch-22 situation.

Reeling under a financial burden of nearly Rs 8,000 crores due to non-clearance of subsidy by the state government, the new announcement by Chief Minister Bhagwant Mann will put an additional financial load of over Rs 2,000 crore on the PSPCL. The state government has to pay the amount to the corporation as the annual electricity subsidy bill.

Already struggling to meet the summer power demand, the PSPCL has to arrange power from outside sources during the paddy season especially.

The PSPCL was already under stress when erstwhile Congress-led Punjab government under the leadership of Chief Minister Charanjit Singh Channi had slashed power tariff by Rs 3 per unit for all domestic consumers with a load up to 7KW.

Highly placed sources in the PSPCL, on the condition of anonymity disclosed that the corporation, which is already facing financial burden with the non-clearance of dues by the government and payable subsidy of upcoming financial year calculated together to be more than Rs 24,000 crore annually, is now a lot more concerned after Bhagwant Mann’s decision to provide 300 units of power free of cost to the consumers from July1, 2022.

“We are waiting for the notification, to be issued by the state government in this regard, for more clarity on additional financial burden and would chalk out the next plan of action. At present, this is a cause of concern for the PSPCL”, an office bearer of the PSPCL employees union said.

More than Rs 8,000 crore power subsidy dues of 2021-22 and Rs 2,000 crore defaulting amount of government department are yet to be cleared whereas the estimated annual power subsidy of more than Rs 14,000 crore for the financial year 2022-23 is reason for worry, another officer informed.

On the present financial health of the PSPCL, one of the revenue generating bodies of the state government, he says that the corporation has to take loans to pay salaries of the employees.

“About 15 per cent of total domestic consumers fall under SC/BC or BPL category and are already availing 200 units of free power. After the AAP government’s decision, the power consumption of these consumers will also jump to 300 units from 200 units” he said.

The PSPCL has raised a loan of Rs 100 crore to ensure adequate power for the paddy season. The power rates were as high as Rs 11 to Rs 12 per unit and providing free power in such a situation is going to drag the PSPCL under huge debt, a former PSPCL officer claimed adding that to meet the high power demand, the PSPCL had to buy 1,500 to 2,100 MW of power from outside sources and would need to utilize all its resources to foot the bill.