Picture this. You are running a restaurant that serves 50 lakh customers every day, yet this restaurant is incurring losses on each meal. You are taking ₹100 from each customer, but it is incurring an expenditure of ₹120. No matter how many items you sell, your pockets are getting thinner. This is what is happening in Punjab’s power crisis. The Punjab State Power Corporation (PSPCL) is this restaurant. It is supplying power to farmers, homes, and industries in Punjab. But it is incurring losses on each unit it supplies. This is why Punjab’s PSPCL is in debt by ₹10,000 crore and borrows at interest rates of 10-12%. In 2024, the PSPCL even struggled to release the salaries and the pensions, and even had to take a loan of Rs 800 Crore to pay the same. PSPCL employees watch their corporation lose crores every year. No profits means delayed salaries, no bonuses, and no job security, especially for the contractual employees. Meanwhile, the state government promises to pay these subsidies, but always pays late. The financial bleeding of PSPCL is quantifiable and alarming. Currently, the corporation shells out approximately ₹1,700 Crore annually merely on interest payments (Finance Costs). A significant portion of this is avoidable, it is the cost of borrowing working capital to keep operations running while waiting for the State Government to release promised subsidies. In essence, PSPCL is forced to borrow money at commercial rates simply to cover the gap left by the State’s payment delays, a burden that ultimately weakens the backbone of Punjab’s power infrastructure.
PSPCL ranks 7th nationally among state utilities, which sounds impressive until you understand what it means. The corporation maintains 10.96% technical and commercial losses, the lowest among major state DISCOMs, but still loses ₹600-700 crore annually.
In Punjab, farmers receive free electricity for agricultural tubewell pumps, fully subsidized by the state government (around ₹10,000–10,413 crore annually in recent years). For industries, tariff rates are higher to partly subsidize such agricultural electricity subsidies through cross-subsidy; industrial tariffs range from ₹5.82 to ₹6.60 per unit (or kVAh), based on categories that could be small, medium, and large, and along with additional charges and night rebates at a tariff of ₹5.50 per unit. This might add to a higher cost for industries in Punjab than in a few other states such as Gujarat and/or Delhi.
For years, Delhi, Gujarat, and Odisha avoided this trap through different mechanisms. Delhi privatized distribution in 2002. Tata Power-DDL and other private operators in Delhi reduced losses from 45-60% to 6.5%, earning ₹843 crore profit last year with 15-18% returns on equity. Gujarat kept distribution public but maintained aggressive cost discipline and early smart meter adoption. Dakshin Gujarat Vij Company Limited (DGVCL) achieved 1.31% losses, the lowest in India, generating ₹239.33 billion in revenue with near-99% profitability. Odisha privatized its DISCOMs (now operated by private entities like TP Odisha Distribution companies under Tata Power), retaining public ownership stakes in some contexts, but using private operators with new contractors reduced AT&C losses 14% annually.
Punjab has been in the throes of unabated protests against the Electricity Amendment Bill 2025, with farmer unions joined by PSPCL employees unions but the most essential feature of the act is that it is absolutely voluntary for any state to implement. Section 43 (4) of the Amendment Bill reads that states can decide whether to allow private or multiple distribution companies. If Punjb wants PSPCL to remain the sole distributor, that’s allowed. If Punjab wants PSPCL to compete with others only in cities while running rural areas alone, that’s also permitted. Second, the bill does not touch the free electricity given to the farmers, as well as the 300-unit free electricity given by the Punjab Government to the people of the state. All these subsidies are explicitly protected under Section 65 of the Amendment bill. The draft reads: “State Governments may continue to provide subsidies to farmers.”
The bill is also an advantage to the industries and the PSPCL since the long-standing problems they had will be solved. The elimination of cross-subsidies will ensure that industries get cheaper power, which will be a stimulus to other industrialists to set up their units in the state of Punjab. The PSPCL will get the subsidies in the form of money each month. Moreover, the Bill requires Direct Benefit Transfer to all government subsidies. The state governments’ habit of postponing the payment is thus stopped. The late payment surcharge charges of ₹0.50 per unit have to be paid by the government. The payment of subsidies thus becomes a constitutional requirement.
Whenever DISCOMs are under financial stress, it is the employees who suffer the most. From late salaries and pensions to contractual employees not getting regularised or hoping to get any salary increments, state governments’ delayed payments to the DISCOMs are the root cause of the problem.
When private players enter electricity distribution, one of the most transformative but overlooked consequences is massive job creation. This is not about replacing workers; it’s about creating entirely new categories of employment that didn’t exist under government-run utilities. Punjab can expect similar transformations if it implements the Electricity Amendment Bill 2025.
The case study with the most persuasive outcome is that of Odisha. When Tata Power acquired all four DISCOMs within Odisha in 2020-2021, it not only retained 5,000 existing workers but also designed an overall talent development scheme known as “Parivartan to Pragati.” Instead of letting people go, Tata Power retained all its workers and also formed almost 30,000 new “technical jobs” related to operation centers, “meter reading centers,” and “kendras” for customer service support. Moreover, Tata Power also onboarded “900 Bijuli Didis” from rural self-help groups as “meter readers, bill collectors, and energy conservation educators” for over “2 lakh consumers.” Net cumulative outcome: Tata Power-run Odisha DISCOMs have created “over 53,000 jobs,” which is roughly an “employment growth rate of 10 times.” The new hiring range includes “technicians, engineers, field officers, customer service representatives, data analysts, and community workers.”
Despite protests in Punjab, the government is moving ahead with the introduction of the Electricity Amendment Bill 2025 in the Budget session of Parliament. Organized farm groups like Samyukt Kisan Morcha, Kisan Mazdoor Morcha, and Bharatiya Kisan Union have launched a joint protest movement, asserting that, once passed, it will facilitate privatization of electricity distribution, scrap cross-subsidies, and agricultural free electricity schemes. Burning copies of the Bill has been a part of protests in a number of districts, but still, it is moving ahead to become a piece of legislation in Parliament. The Ministry of Power has fixed dates to discuss it with stakeholders on January 12-13, then meetings of state power ministers are scheduled on January 22-23, 2026, so it will then be introduced in Parliament.
Punjab’s power sector can be saved. The Amendment bill is the instrument. The question is whether Punjab has the vision to use it.
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