Free power to farmers may hit regulatory panel hurdle this year

With the state government having failed to pay the power subsidy bill to the Punjab State Power Corporation Limited (PSPCL), free electricity to farmers may hit the regulatory hurdle this year as the norms do not permit carrying forward of the subsidy bill.

For issuing the tariff order, the Punjab State Electricity Regulatory Commission (PSERC) had completed the procedure, which included the PSPCL’s annual performance review (APR) petition and holding of public hearings, with the last step remaining that involves the decision on subsidy.

In the previous tariff orders, the regulator had been working out the subsidy amount payable on the basis of subsidy already being given and on the assumption that the same will be continued. The commission then sends a communication to state government giving the details of the subsidy payable and seeking the latter’s confirmation whether the amount should be recovered from consumers or the government will pay the subsidy.

Finally, on the basis of the state government’s reply, the PSERC will incorporate whether the tariffs will be charged from consumers or not are in the order to be issued.

The government has failed to pay subsidy as per the commission order and the subsidy arrears have shot up from ₹2,909 crore on March 31, 2017, to an estimated ₹5,500 crore by the end of the fiscal year.

Thus, the subsidy amount payable for the upcoming 2018-19 fiscal will be somewhere between ₹13,000 and ₹14,000 crore, including the ₹5,500 crore arrear.

“The arrear amount is so huge that it will be impossible for the regulator to ignore or overlook it. Moreover, PSERC is bound by Section 65 of the Electricity Act which requires it to order the recovery of full/unsubsidised tariff in case of default. It also has a compulsory provision for advance payment of subsidy.

So if the commission orders that subsidy arrears of 2017-18 be recovered/paid during 2018-19, it will be a clear contradiction of Section 65 provision of advance payment,” said a PSERC official.

If the commission takes cognizance of the subsidy default it is bound to charge full tariff from April 1, 2018.

Now, it is up to the state government as how it convinces the PSERC to continue subsidised tariff without clearing arrears, the official said.

Retired PSPCL engineer Padamjit Singh said he has already opposed the subsidy as the government has failed to keep its promise. “My objections are listed with PSERC, and I will file a petition to allow power subsidy only if the government clears the arrears. Otherwise it will be a doom for power sector,” said he.

Punjab secretary finance Anirudh Tiwari could not be contacted for comments despite several attempts.