In a major development aimed at unlocking significant financial benefits, the Punjab State Power Corporation Limited (PSPCL) has issued directives for the implementation of prepaid smart metering across all government electricity connections starting February 15, 2026. This strategic move is directly tied to fulfilling the Central government's power sector reform conditions, which would enable Punjab to access additional borrowing space equivalent to 0.5 percent of its Gross State Domestic Product (GSDP).
Central Reform Incentive Drives Punjab's Smart Meter Initiative
The foundation for this initiative was laid back in 2021-22 when the Centre introduced a power sector reform-linked borrowing incentive. This policy allows states to avail additional borrowing space up to 0.5 percent of their GSDP by implementing specific reforms in their power distribution systems. For Punjab, this translates to a substantial financial opportunity given the state's current economic parameters.
Financial Implications for Punjab's Economy
With Punjab's GSDP for 2024-25 estimated at approximately Rs 8.1 lakh crore and projected to reach around Rs 8.9 lakh crore for 2025-26, the 0.5 percent additional borrowing capacity becomes particularly significant:
- 0.5% of 2024-25 GSDP equals roughly Rs 4,000 crore
- 0.5% of 2025-26 GSDP amounts to approximately Rs 4,400-4,500 crore
This additional borrowing capacity comes at a crucial time for Punjab, which faces considerable fiscal stress with outstanding debt estimated to surpass Rs 4 lakh crore by the end of the 2025-26 financial year.
Implementation Details and Technical Specifications
According to the PSPCL letter dated January 28, 2026, addressed to chief engineers across various districts, the prepaid metering system will be implemented specifically on one-phase and three-phase whole current smart meters. The technical specifications include:
- Sanctioned load up to 7 kW for single-phase connections
- 7 kW to 45 kVA for three-phase connections
- Maximum load limited to 100 amperes
The implementation follows the circular dated February 7, 2023, and its subsequent amendment on February 14, 2023. Notably, the February 14 amendment exempted government hospitals, street lights, and water works power connections from the prepaid smart meter scheme, recognizing these as essential emergency public services.
Rationalization of Electricity Connections
In a parallel move to streamline operations, PSPCL has ordered the rationalization of electricity connections across government premises. The corporation has mandated that only one meter will be permitted per premises or area, including grid stations, subdivision offices, and nearby board offices. All multiple or parallel connections must be removed under this new directive.
The rationalization decision stems from the existing centralized complaint handling system through the 1912 helpline, which has made separate electricity connections for different complaint centers or board offices redundant.
Addressing Chronic Payment Delays
The shift to prepaid smart meters comes against the backdrop of significant outstanding dues from government departments. PSPCL records reveal that as of December 31, 2025, nearly 38,000 smart meters had already been installed across various Punjab government departments. However, all these meters currently operate in post-paid mode, contributing to persistent issues of delayed and non-payment of electricity bills.
Sources within PSPCL indicate that outstanding power dues from Punjab government departments have crossed Rs 2,600 crore, creating substantial financial stress for the power utility. Major defaulting departments include water supply, local bodies, health, and rural development.
The conversion of existing smart meters into prepaid mode is expected to address this chronic problem by ensuring advance payment for electricity consumption, thereby improving PSPCL's cash flow and reducing arrears.
Installation and Billing Procedures
PSPCL has specified that smart meters must be installed strictly outside premises, either on poles or in meter boxes, with anti-tampering measures such as polycarbonate seals. The corporation is also moving toward paperless billing, making it mandatory for government departments to provide updated contact details of nodal officers and drawing and disbursing officers for bill delivery through email and mobile platforms.
Broader Reform Agenda
The Centre's borrowing window is linked to a comprehensive set of power sector reforms that extend beyond just prepaid smart metering. These include reduction of power distribution losses, improvement in billing efficiency, and strengthening the financial position of distribution companies. The prepaid smart metering drive in Punjab is therefore seen as part of a broader reform-driven measure rather than merely a technical upgrade of meters.
PSPCL sources emphasize that this initiative aims not only to improve the corporation's financial health but also to enhance the state's eligibility for additional borrowing capacity. In a state grappling with fiscal challenges, the successful implementation of these power sector reforms could provide much-needed financial breathing room while modernizing the electricity distribution system for government consumers.
