Engineer’s Association of Punjab State Power Corporation Limited (PSPCL) has written an open letter to Chief Minister Punjab drawing his attention to the impending financial crisis and the consequential power crisis in the state. Here is the full text:

Sir,

It is our bounden duty as a professional body of Power Engineers to caution the Government of the impending financial crisis and the consequential power crisis in the state.

The financial position of PSPCL has been steadily deteriorating particularly due to non-payment of subsidy by Punjab Government and defaulting payments by various Punjab Government departments.

Punjab govt’s annual power subsidy bill in this financial year is expected to cross Rs 19000 crore in 2022-23, which includes free/ subsidised power to industries, agriculture and domestic consumers, that too without considering the backlog subsidy payment of 9020 Cr.

The payments against waiver of defaulting amount by Punjab Government for about 1555 Cr is pending for almost one year. Due to non payment of electricity bills by Punjab Government departments the defaulting towards Punjab Government has exceeded 2600 Cr. The power sector of Punjab is heading towards a man-made financial and power crisis.

Sir, the concerned authorities in the Punjab Government have deliberately underestimated the expenditure on power subsidy by almost 7000 cr. Now with no budget provision for this big gap in expenditure, PSPCL is being forced to arrange funds on its own by loans from banks and financial institutions at high interest rates.

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This lending will increase the overall cost of power for the ordinary consumers. Fuel Cost Adjustment (FCA), a major component of the tariff and allowed by PSERC time-to-time to compensate for the inflation in coal prices, has been kept pending by the Punjab Government.

For the first time in the history of Punjab, Govt has denied FCA which is another unrecoverable hole in the finances of PSPCL.

Sir, if PSPCL fails to arrange sufficient funds through loans to cover these gaping holes in its finances, and thereby failing to procure sufficient electricity, coal, materials or defaults in payment for electricity purchase during the coming summer season, people of Punjab will have to face serious power shortages and blackouts in the coming paddy season.

It is pertinent to mention here that this severe financial crisis has already resulted in PSPCL defaulting in its contractual obligation of Payments to Large Industries which will further lead to litigation and interest payments to such suppliers.

The inordinate delay in taking final decision on filling the very important posts, which could have planned to work-around this man-made crisis, i.e. the posts of CMD/Directors in PSPCL/ PSTCL, Member PSERC, Chief Electrical Inspector; is negatively affecting the efficiency of the state power sector.

Sir, this ad-hocism on part of the Punjab Government to take final decision for such important posts will affect the preparation for the coming paddy season. The sorry state of affairs has been further compounded by the interference of Private Consultants from a Bengluru based private company in the day-to-day decision making of the power corporations.

A new challenge due to free 600 units of electricity has emerged and has resulted in an unprecedented peak in the power demand in the winter months for domestic consumers.

Political patronage to theft of electricity has not reduced, rather the free units of electricity have acted as an incentive for some unscrupulous consumers with political patronage, to keep unit consumption below 600 units at any cost and vigilance activities by corporation staff are being thwarted by these unscrupulous elements.

Though approval of RDSS by the Punjab Government is appreciated but even that was delayed in unnecessary bureaucratic process for more than 6 months for no apparent reason or justification costing Punjab precious time in getting the much needed funds for improvement works.

Now similarly interests of Punjab in BBMB and coal haulage through rail are not being defended with the urgency that is required. This escalation of input costs in coal haulage due to policy change by GoI is going to significantly increase the subsidy bill of Punjab Government in the coming months, which will put an additional unwanted burden on the state exchequer.

Sir, the upcoming paddy season is going to be challenging for the power sector due to such “costly indecisions” attributable only to the Punjab Government.

The power demand is expected to exceed 15000 MW, with dwindling finances and no increase in power generation in the state sector, ordinary consumers will face power interruptions and blackouts if immediate corrective and timely actions are not taken by the Punjab Government.

Further it appears that the Punjab Government has no plans for catering to the future increase in power demand in the state and future of Punjab is being pledged on untested RE generation model by SECI.

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Any further delay in addressing this man-made crisis will be fatal for the Punjab power sector.

With highest regards and in anticipation of early action.

___________

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