CHANDIGARH: The Punjab State Power Corporation Limited (PSPCL) made a U-Turn and has decided not to raise the Rs 10,000 crore loan from the debt market through bonds and non-convertible debentures.
Sources said that the decision in this regard was taken at a meeting of the PSPCL Board of Directors on Wednesday as the board examined that the state power company had managed to raise a bank loan of Rs 5,500 crore, which for the time being is enough to be used as the working capital.
The board members were informed that since banks were willing to extend the loan to the power company without seeking any fees, the bid to raise loan through a merchant banker had become unnecessary.
It is learnt that the money was to be raised through this loan by the merchant banker was without a state government guarantee. The rationale that was earlier given was that the loan was needed to address the liquidity crunch in the power company, caused by delayed subsidy and unpaid power bills.
On June 15 a tender for raising the loan through merchant bankers was floated and the technical bids were opened on July 30. The funds were to be raised in two tranches of Rs 5,000 crore each.
Three entities, AK Capital Services Limited, Trust Investment Advisers Private Limited and Real Growth Securities Private Limited had bid for being appointed the merchant banker.
All three are SEBI Registered Category 1 merchant bankers. The lowest bid was submitted by AK Capital, which asked for an arranger fee of 1.5 per cent of the total fund mobilisation.
Interestingly, when the power tariff for the 2026-27 financial year was announced a few months ago, the Punjab State Electricity Regulatory Commission, while allowing a tariff cut, had said that the power utility had a cumulative revenue surplus of Rs 7,851.91 crore.
However, during a debate in Parliament earlier this month, Union Power Minister Manohar Lal Khattar pointed out that the financial position of the state’s power utility was “not good.’’
The state government and its departments together owe PSPCL nearly Rs 9,600 crore, including around Rs 7,000 crore in pending power subsidy reimbursements and about Rs 2,600 crore in unpaid electricity bills of various government departments.
This year, the Punjab government has to pay around Rs 15,500 crore to PSPCL towards free power supplied to various categories of consumers. In the 2026-27 Budget, nearly Rs 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.
Earlier the Greater Mohali Area Development Authority (GMADA) was also given its go-ahead by the state government to raise Rs 15,000 crore through a long-term development bond. The merchant banker chosen for the purpose was to be paid an arranger fee of Rs 191 crore.
