Chandigarh: Even as Punjab reels under a severe power crisis, the events of the past fortnight have exposed its complete inability to meet peak demand with both state-run and private thermal plants performing below their capacity.
The crisis that left industrial units with 14 hour-plus power cuts and farmers unable to irritate paddy brought out the failing financial health of the Punjab State Power Corporation Limited (PSPCL), which is burdened with a free power subsidy bill of over Rs 20,000 crore.
On Tuesday, Power Minister Tarunpreet Singh Sond claimed that Punjab met its highest-ever electricity demand of 17,423 MW without imposing any power cuts, while maintaining 24×7 power supply across the residential, commercial, industrial and agricultural sectors.
What remained unsaid was the power purchase worth crores in the past 15 days to meet the unexpected high demand. On 2 September alone, it bought around 2,709 lakh units at an estimated cost of Rs 119.5 crore. Some short-term purchases were also made at considerably higher rates. On an average, the corporation is spending over Rs 50 crore a day to tide over the crisis.
Mann Government meets record 17,423 MW power demand without cuts
👉 Punjab met its highest-ever electricity demand of 17,423 MW while maintaining 24-hour supply to residential, commercial, industrial and agricultural consumers.
👉 Technical issues at private power plants were… pic.twitter.com/3s4XPEXqcf
— AAP Punjab (@AAPPunjab) September 15, 2026
The corporation’s engineering association wrote to Chief Minister Bhagwant Mann, highlighting that the PSPCL’s precarious financial position is primarily due to the pending subsidy dues by the government and mounting defaults by various departments in clearing electricity bills.
“The expenditure projections in the recent annual revenue requirement were deliberately underestimated, resulting in an artificially reduced tariff determination, thereby inflicting severe financial stress upon the Corporation,” the letter reads.
Sources in the corporation explained that while the subsidy bill for domestic, agriculture and industrial users was expected to be at least Rs 22,250 crore, it was projected as less than Rs 15,200 crore.
Since the government pays the subsidy, PSPCL suffered a loss of over Rs 5,000 crore, while the government saved that money to fund it’s populist freebies, said the source. Another Rs 2,400 crore is due from government departments who have defaulted in paying their own electricity bills.
PSPCL’s financial position remains closely tied to subsidies. Punjab’s subsidy requirement for 2025-26 was nearly Rs 19,657 crore. Delays in subsidy payments have sometimes left PSPCL waiting for thousands of crores, even as it has to cover expenses and buy power from outside.
Surging demand & reduced production
The first signs of trouble appeared in September with electricity demand remaining unusually high. Normally, demand begins to fall in September and, with the paddy irrigation season nearing end, pressure on the power system eases.
This year, deficient rainfall, persistent heat and continued dependence on tubewells for paddy irrigation kept demand at peak summer levels. Demand crossed 16,000 MW on several days and, subsequently, moved above 17,000 MW. The resulting shortage was managed through expensive power purchases and restrictions on consumers.
From around 6,580 MW in 2016, the thermal generation capacity is now about 5,680 MW. The 460 MW Bathinda thermal plant was shut down in 2018. The Ropar thermal plant’s output fell from 1,260 MW to 840 MW after the retirement of two units that year.
The Lehra Mohabbat and Goindwal Sahib thermal plants have a capacity of 920 MW and 540 MW. In 2024, PSPCL acquired the Goindwal Sahib plant from the financially distressed GVK group for about Rs 1,080 crore initially. The acquisition was completed through payments to lenders. The government repeatedly argued that buying Goindwal was strategically important because it added 540 MW of generation capacity and could use coal from Punjab’s captive Pachhwara mine. The state’s position, Sond argued, would have been considerably worse without this acquisition .
The total capacity of state-run power plants is 2,300 MW, much lower than the growing demand. The government, as a result, depends heavily on two private facilities: the Nabha Power’s 1,400 MW Rajpura plant and Talwandi Sabo Power’s 1,980-MW plant.
The coal shortage ‘bluff’
As the power crisis hit in the first week of September, Punjab laid the blame on the unavailability of coal. Sond claimed that a severe national coal shortage deepened the crisis, with power generation falling by 1,500 MW and major thermal plants being forced to operate at reduced capacity.
In a video, he said coal shortage affected 63 GW of power supply across the country, while reduced central coal supply hit the Rajpura and Talwandi Sabo plants, further impacting Punjab’s power system.
The Centre was quick to call the state’s bluff. On 6 September, the coal ministry released a statement saying that as on 4 September, coal stock at PSPCL’s plants stood at around 117 percent of the normative requirement, reflecting more than adequate availability.
It pointed out that despite this comfortable stock position, the average Plant Load Factor (PLF) during August was only around 42 percent. The low generation cannot be attributed to inadequate coal availability, the ministry added.
That same period, it said, the privately-run Rajpura plant achieved around 93 percent PLF, backed by adequate coal supplies from CIL sources, demonstrating that coal availability was not a constraint for power generation.
PLF is the generative performance of a plant, and its percentage is a pointer towards how well a plant is functioning.
Sources in PSPCL admitted to the ministry’s observation that Ropar’s PLF remained at 36.4 percent in August, while the Lehra Mohabbat plant recorded a mere 28.7 percent PLF. This was attributed to a strike of contractual staff which ended 2 September.
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Private plants falter
After the return of staff, the situation improved drastically at the Lehra Mohabbat and Goindwal Sahib plants despite technical problems. For instance, the PLF at Goindwal and Lehra Mohabbat plants stood at over 89.5 percent and 73.4 percent in the first half of September.
But the Ropar plant’s PLF remained 42 percent, with multiple units remaining shut down for days all together. One of its four units is still under repair.
“Ropar is an old plant and was slated to be retired completely, but it continues to function though unsatisfactorily. It has multiple technical issues that don’t allow it to operate beyond 50 percent PLF,” a senior PSPCL officer told ThePrint.
As the government scrambled to explain the below average performance of its plants, it shifted the focus on the private facilities. It reported that a 700-MW unit at Rajpura and a 660-MW unit at Talwandi Sabo went out of operation, resulting in a combined generation loss of 1,360 MW. The two units remain shut since 10 and 11 September because of technical problems.
The glitches were compounded by depleting coal stocks. By 13 September, Rajpura reportedly had around seven days of coal while Talwandi Sabo around four days.
“The two private plants chose to perform below capacity because of shortage of coal stocks. They were supposed to maintain a certain amount of stock to tide over such acute demand situations but they failed to do so,” the officer said.
But, the coal ministry noticed that private power plants were not maintaining adequate coal stocks. In a 6 September statement, it said private plants, including Rajpura and Talwandi Sabo, can get up to 50 percent of annual coal requirement from the Pachhwara Central Coal Mine after meeting the needs of designated end-use plants.
However, the plants had to improve the lifting of coal already offered by CIL. Coal India subsidiaries, it said, proactively offered coal to Punjab-based private plans but booking and lifting had lagged.
The aftermath
On 14 September, Mann asserted that disruption in coal supplies caused the power crisis. Flooding in Jharkhand affected both state and private plants, he said, adding that he contacted the CM there to expedite the release of coal from Punjab’s dedicated mine. Mann said he wrote to the Centre seeking permission to use coal from Punjab’s mines for the private plants.
The ministry negated the charge of shortage of coal again. On 14 September, it issued a statement asserting that the two private power plants had adequate supply. “As against the Rajpura plant’s average consumption of around 4.3 rakes a day over the last three days, rake supply has averaged around 5 rakes and against Talwandi Sabo’s around 3.8 rakes a day, supply averaged around 5 rakes,” reads the statement.
The ministry suggested that Punjab improve offtake from its captive mines as several lakh metric tonnes of coal was awaiting to be picked up.
“At the Pachhwara Central mine of PSPCL, for the period April 2026 to September 11, 2026, production stands at 83.67 percent of the annual target, while dispatch stands at only 68.44 percent,” it said. ”This gap points to a build-up of unevacuated stock at the mine of around 3.21 lakh tonnes, which the state should evacuate to generate more power at PSPCL’s own plants.”
It was then that PSPCL sent show cause notices to the management of the two private plants for not maintaining the requisite coal stocks. PSPCL MD Basant Garg was shifted out and in came Gurkirat Kirpal Singh.
Financial consequences & a warning
The PSEB Engineers Association, a body of engineers working in the electricity department, has been particularly critical of Punjab’s generation planning. On 7 September, its general secretary Ajay Pal Singh Atwal wrote to Mann arguing that Punjab was “overdependent” on purchased electricity.
The association had called for three new 800-MW units at Ropar, along with a 250-MW solar project at the old Bathinda site.
“During the peak summer, Punjab’s generation capacity falls drastically short of its soaring power demand, compelling PSPCL to rely heavily on expensive power procurement from energy exchanges. This vulnerability is compounded by the growing unreliability of inter-state power banking arrangements,” the letter reads.
“For instance, hydro-rich states like Himachal have increasingly opted to capitalise on high open-market prices during peak summer months, rather than engaging in power banking. Consequently, reliance on market-based procurement and banking offers no guaranteed energy security.”
Punjab needs to urgently increase thermal power capacity to ensure reliable power supply round-the-clock, it adds. “Otherwise, the state will continue to face power shortages every summer.”
The association criticised the private thermal plants for failing to maintain the mandatory coal reserves during the critical period. This, it says, was in direct violation of the Central Electricity Authority’s revised coal stocking norms, which mandate maintaining up to 26 days of stock for non-pithead plants.
As a result, it says, there was a drop in in-state generation availability right when power demand hit peak levels, forcing PSPCL to bridge the deficit through exorbitant spot-market exchange purchases.
(Edited by Tony Rai)
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