Sarbjit Dhaliwal, Tribune News Service
Chandigarh, December 5. The state government today declined to accept the Centre’s bailout package offer for the Punjab State Power Corporation Limited( PSPCL) that has a debt burden of about Rs 18, 000 crore, including a short-term loan of Rs 10,000 crore.
“After examining various aspects of the package, we have reached the conclusion that the package has been cleverly designed to bail out various banks from where the power utilities have taken loans and not to benefit power companies in the states,” said a senior official. “The bailout package comes with several riders that would be impossible for the state government to implement,” the official said.
The Centre had offered the package a few weeks ago and had asked the state governments concerned to accept or decline the same by December 31.The Centre had offered to reschedule the payment of 50 per cent of short-term loans secured from banks by the power utilities.This meant that the Rs 5,000 crore short-term loan secured by Punjab State Power Corporation Limited was to be rescheduled. Of the total rescheduled loan, 25 per cent was to be given to the state governments concerned as an incentive for implementing the package terms.
The remaining loan would have to be paid by the state government by issuing bonds to lenders and by paying interest on the bonds.
One of the conditions laid down by the Centre was passing the State Electricity Distribution Responsibility Bill. Another condition was part privatisation of power distribution.
Both the conditions were not acceptable to the state power corporation, it is learnt. Sources said with the issuance of bonds, the state’s borrowing limit would have been be curtailed, which was not acceptable to the state government.
At present, the net annual borrowing limit of the government is Rs 9,900 crore. With the issuance of bonds, the limit would have come down by Rs 1250 crore per annum. “Any decrease in the borrowing limit could create serious trouble for the state that is already starved of funds,”, said a government functionary.
With the PSPCL operating loss coming down to a few hundred crores from the more than Rs 1,000 crore last year, the state government is hopeful that the power utility will be able to manage its fiscal affairs in due course.