PSPCL Drops Plan to Raise Rs 10,000 Crore Through Bonds

Punjab State Power Corporation Limited (PSPCL) has dropped its plan to raise Rs 10,000 crore through bonds from the market, in a significant reversal for the state-owned power utility that had been signalling mounting financial stress.

Sources told The Tribune that the PSPCL board noted the corporation had managed to raise a bank loan of Rs 5,500 crore, which 'for the time being was enough to be used as the working capital'. With the loan in place, the board decided it no longer needed to pursue the bond issue through a merchant banker.

The plan that was shelved

The corporation had initiated plans to raise nearly Rs 10,000 crore from the market without a Punjab government guarantee, a move widely read as a sign of growing financial pressure at the utility. It had invited online bids from SEBI-registered Category-I merchant bankers to appoint a transaction adviser-cum-merchant banker for raising funds through non-convertible debentures (NCDs) and bonds.

Power sector experts had questioned why the utility was seeking to shoulder the liability on its own if the state government was unwilling to guarantee the issue, noting that borrowing without a government guarantee could require PSPCL to offer its assets as security, raising borrowing costs and merchant banker commissions.

Why the utility needed money

PSPCL's financial strain is well documented. The corporation is yet to receive around Rs 7,000 crore in pending electricity subsidy payments from the Punjab government, covering dues from the previous and current financial years. In addition, various state government departments reportedly owe about Rs 2,600 crore in unpaid electricity bills.

The subsidy burden has been climbing for years: for 2025-26 alone, PSPCL raised a subsidy bill of Rs 14,700 crore against the state government, which had released only about Rs 8,700 crore, leaving Rs 6,000 crore unpaid, with two legacy instalments of Rs 2,289 crore and Rs 1,804 crore also pending. The utility has also incurred higher expenditure after purchasing costly power from the market to meet peak summer demand, and has recently submitted its revised Annual Revenue Requirement proposal to the Punjab State Electricity Regulatory Commission.

What happens next

For now, the Rs 5,500 crore bank loan gives PSPCL breathing room on working capital. Whether the bond plan stays shelved will depend on how the utility's finances evolve through the coming months, as subsidy arrears and power purchase costs continue to shape its balance sheet — and consumers will be watching for what it all means for tariffs.