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What’s wrong with the PSEB?
Harjap Singh Aujla 

Forty years ago the Punjab State Electricity Board was a healthy baby and registering normal growth. It was definitely short of electricity, but its fiscal health was very good and it was in a position to undertake its own power generation projects. But now the fiscal health of the board is too precarious to obtain low interest loans from the financial institutions for undertaking additional generation of power. The amount of loan on the board has exceeded rupees 13000 and its cumulative losses are in excess of rupees 7000 crore. A total deficit of 20000 crores of rupees is dealing a crippling blow to the board.  

For a small utility organization serving a population of twenty five million, it is a situation akin to going into bankruptcy. In America or in any Western European country such a body, state owned or a privately owned, would have declared bankruptcy and folded up long a go. But in Punjab, we have formed the habit of brushing every bit of dirt under our own rug. Our politicians in Punjab are alien to the concept of planning for the future and saving for the coming generations. We are leading a day to day existence. Like a drug addict or a typical gambler, we live for a day and forget what will happen in foreseeable future. On its own, the Punjab State Electricity Board is not to blame for its ills. It is the Government of Punjab which has, because of its policy of giving freebees to a host of sections of the society, pushed this once a flourishing electricity board into a position of incurring mounting losses and in de-facto insolvency. 

On paper the Punjab State Electricity Board is an autonomous body, but in reality it is not so. Its strings are firmly in the hands of the Punjab Government. The outwardly all powerful chairman of the Punjab State Electricity Board is appointed by the Government of Punjab (it means the Chief Minister of Punjab). The other bureaucrats including the technical members are also hired and fired by the government of the day. Even after the formal appointment, the sword of Damocles is kept hanging on the heads of the PSEB. The government has the covert right to remove them or to coerce them into submission and resignation. The lust of obtaining future extensions also subjugates the top brass in the board into playing as the puppets into the hands of the political rulers of the day. It is the professionalism, in a vital organ, that is made to suffer in the long run. The bureaucracy of the Punjab State Electricity Board invariably is forced into taking irrational decisions which are thoroughly detrimental to the healthy growth of the board. Ultimately the public, using its services is made to suffer the most. 

The biggest source of income of the board is the industry. The factories not only give employment to the work force, they pay state and federal taxes too. The factories are also the biggest source of income to the Punjab State Electricity Board. They should get twenty four hour uninterrupted supply of electricity, but the fact remains that during the summers, they are forced to keep the factories closed for two days in a week. On several occasions the government has enforced a three day closure on the industrialists. This is one of the reasons as to why new industries are not opening in Punjab and the existing ones are shutting down and moving lock stock and barrel to the neighbouring states. 

The commercial establishments, including the petty shop-keepers are the second most loyal customer of the Punjab State Electricity Board. They are also getting a raw deal. Their power supply is even more erratic than that to the industrial sector. The shopkeepers have to burn expensive diesel oil to generate electricity for keeping their businesses open. The real cost of generating power by burning diesel is at least three to five times the cost of PSEB supplied electricity. In such adverse circumstances it becomes difficult to run business with honesty. These are the value added tax paying customers of the Punjab Government. Lately the hotel industry has been flourishing in Punjab. The city of Amritsar is experiencing an unprecedented boom, but the hotel owners are being crushed under crippling power cuts. The government must come to the rescue of this new sector of economy, which is also contributing substantial value added tax to the state. 

Had there been no free supply of electricity to the farm sector and the weaker sections of society, the PSEB would have earned additional three thousand crores of rupees each year, which would have kept it out of the red. If every section of the society had paid its dues to the electricity board, there would have been no resistance from the urban consumers to paying enhanced bills, which become necessary due to inflation related rising costs.  

On the other hand the Punjab Government, which has to compensate the power board for the distribution of free electricity, would have also saved at least 3000 crores of rupees every year. This saving would have fetched at least rupees five thousand crores from the central government each year in matching financial aid programmes. That would mean that the present SAD-BJP Punjab Government would have saved 8000 crores of rupees of its own exchequer and obtained additional central assistance worth 12000 crores of rupees. In other words it would have meant 20000 crores of lesser loan on the Punjab Government. It is pertinent to point out that the Punjab Government’s debt has exceeded rupees 61000 crores and the clock is ticking faster than ever. But will the Punjab Government read the writing on the wall?               

11 November  2009
 

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