Unable to clear huge outstanding arrears running into about Rs 2,000 crore and to not annoy an influential workforce of about 80,000 in view of forthcoming Panchayat elections in April and Parliamentary elections later, the political leadership in Punjab is going slow on unbundling of the Punjab State Electricity Board (PSEB).

After coming to power, Punjab chief minister Parkash Singh Badal had sought an extension of six months from the Centre to initiate power reforms in the state. In December 2007, the Punjab government sought another extension of six months and the Centre obliged yet again by giving an extension upto February 29, 2008.

Power department sources told FE here on Tuesday, “As it is mandatory to apply for extension at least three weeks in advance, the Punjab government is considering to seek another extension and a formal request may be sent to the Centre in next couple of days.” Sources said additional secretary (power) AS Miglani and deputy chief engineer (power) Darshan Singh have left for Delhi to seek a meeting with officials in the power ministry to discuss the issue.

Interestingly, this will be the eighth extension in row for PSEB. The political compulsions of the successive Punjab governments could be understood from the fact that earlier the previous Amarinder Singh government had got a number of extensions from the power ministry to avoid power reforms since year 2003.

Official sources told FE here on Tuesday that 18 states have already “unbundled” their electricity boards and formed different companies as part of reforms to look after generation, transmission and distribution. However, Punjab and Himachal Pradesh in the North, Kerala and Tamilnadu in South and some North East states have been on extension taking spree.

The Badal government like the previous government has been seeking extensions to handle the sensitive issue of power reforms, which are vehemently being opposed by board employees. Insiders say that “recent visit by a team of senior officers of the PSEB to Gujarat to study power.

However, the immediate cause of concern for the Punjab government is a letter from the the power minister Sushil Kumar Shinde to Punjab chief minister Parkash Singh Badal, suggesting that mounting financial loss and debt burden on the PSEB will lead to its collapse. Shinde had written a letter to Badal drawing his attention towards the deteriorating fiscal conditions of the PSEB. Expressing concern over the accumulated fiscal losses of Rs 6,500 crore and debt burden of Rs 13,000 crore, Shinde has told the state government that such a situation is not good for the PSEB.