Punjab Wants Solar Developers to Provide 10% Discount on Tariffs from July

The Government of India’s decision to impose a nationwide lockdown from March 23, 2020, to contain the spread of COVID-19 pandemic, has had a big impact on the power sector. In Punjab, like other states, the lockdown has led to the lowering of power demand, with the demand from the industrial category dwindling to almost zero. Considering the unprecedented situation, the Punjab State Power Corporation Limited (PSPCL) in a letter to developers has requested them to provide a 10% discount on the power tariff to be billed from July 01, 2020.

The letter noted that the ensuing COVID-19 pandemic and the subsequent lockdown affected the collection of PSPCL, which provided constant power supply to health centers, hospitals, and quarantine centers across the state for their smooth functioning.

Further, PSPCL stated that CERC and PSERC had established the tariff as per the power purchase agreement (PPA). While determining the rate, the Central Electricity Regulatory Commission (CERC) and the Punjab State Electricity Regulatory Commission (PSERC) had taken into account the interest on loan capital as 13% to 13.5%. These rates have reduced considerably over the period. PSPCL in the letter said that the Reserve Bank of India (RBI) had come up with several steps to ease the financial owes of the commercial sector. The RBI reduced the repo rate, which effectively brought down interest rates for term loans taken by generating companies.

The year 2019 was marred when the Andhra Pradesh government decided to retroactively review the PPAs signed between the state’s electricity distribution companies and power generators to renegotiate tariffs. The growth in the industry suffered a huge setback, not to mention the adverse effect it had on investor sentiments. And now Punjab seems to be following the same route.

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