The Punjab government is now considering giving power at a subsidised rate instead of free of cost to farm sector in view of poor fiscal condition of the state and a tough attitude adopted by the Punjab State Electricity Regulatory Commission (PSERC) in this regard.
According to sources, the government is working on a proposal to give power to farm sector at 50 % tariff. The department was to pay a subsidy of Rs 2,000 crore to the Punjab state electricity board. In fact, the annual subsidy on account of power amounts to approximately Rs 2,700 crore.
Supplying power at 50% tariff would ease the burden of finance deparment by Rs 1,000 crore. The PSERC has calculated the subsidy to be paid by the finance department to the PSEB in lieu of free power to farm sector at the rate of Rs 2.40 paise per unit.
Namita Sekhon, secretary PSERC told FE, “The letter by the commission was sent to the Punjab government on January 5. The letter follows instructions from the Centre wanting to know the criteria adopted to pay subsidy in lieu of free power to the farm sector and poor sections of the society in the state.”
The commission would wait for state government’s response till February 5 after which the sectors deriving free power could be asked to pay for the power used, she added.
As per rules, the state government is supposed to pay the subsidy in advance to provide free power to any sector or section of the society. In case of default or failure of the same, the commission can order the PSEB to charge the sections of the society, which were to get free power.
Sources say that the fund-starved state government has not been able to pay subsidy to PSEB from January 2007 onwards. With annual subsidy of about Rs 2,700 crore, the arrears amount to Rs 1,350 crore approximately. The issue could not have cropped at a worst time as unbundling of PSEB is due and the state government had sought extension from Centre till February.