Months after projecting itself as a financially stable utility before the Punjab State Electricity Regulatory Commission (PSERC), the Punjab State Power Corporation Limited (PSPCL) has decided to raise up to ₹10,000 crore from the debt market, highlighting persistent liquidity stress despite reporting improved financial performance.
Event Context
The proposed borrowing comes despite PSPCL maintaining in its latest Annual Revenue Requirement (ARR) filings that its “finances had improved and that it had returned to profitability”. The utility relied on this assessment while seeking approval for its revenue requirement and tariff framework before the regulator.
The Punjab government and its departments together owe PSPCL nearly ₹9,600 crore, including around ₹7,000 crore in pending power subsidy reimbursements and about ₹2,600 crore in unpaid electricity bills of various government departments.
Senior PSPCL officials said the subsidy dues comprise nearly ₹4,000 crore carried over from the previous financial year and another ₹3,000 crore accumulated during the first three months of the current fiscal. “We have no cash to run the day-to-day expenses, thus this borrowing,” explained an official, requesting anonymity.
This year, the Punjab government has to pay around ₹15,500 crore to PSPCL towards free power supplied to various categories of consumers. In the 2026-27 Budget, nearly ₹15,550 crore was earmarked for power subsidy, covering free electricity for farmers and households consuming up to 300 units per month. However, the government has been faltering on regular subsidy payments for the last three years.
The issue of delayed government payments has repeatedly figured in proceedings before PSERC. In its submissions, PSPCL acknowledged that delayed receipt of subsidy and government dues compels it to rely on working capital loans, adding to its interest burden. The utility argued that much of this additional financing cost arises because of delayed government payments rather than operational inefficiencies.
Player Focus
The development underscores the contrast between PSPCL’s accounting position and its cash position. “While the utility has projected improved financial indicators in regulatory filings, its day-to-day liquidity continues to depend heavily on timely subsidy reimbursements from the state government,” said an engineer, not wishing to be named.
Match Outlook
Despite attempts, PSPCL chairman-cum-managing director Basant Garg could not be contacted for comment.
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Yet delayed government subsidy reimbursements and mounting power bill dues from the government departments has forced the utility to raise the debt, according to senior PSPCL officials.
“The delayed payments have created a severe cash-flow mismatch, forcing the utility to mobilise fresh financial resources to meet routine operational expenses, power purchase payments and debt servicing,” said PSPCL officials.
