Punjab State Power Corporation Limited (PSPCL) has decided not to proceed with its earlier plan to raise a Rs 10,000-crore loan from the debt market through bonds and non-convertible debentures. The decision was taken at a meeting of the PSPCL board of directors held on Wednesday. Highly placed government sources told The Tribune that the board noted that the state power company 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”.The move comes amid criticism of the proposal to raise the loan through a merchant banker by paying an arranger fee of Rs 150 crore to Rs 177 crore. The proposal had earlier been ratified at a PSPCL board of directors’ meeting in August this year.It was then decided that the money would be raised through a merchant banker without a state government guarantee on the loan. The rationale given was that the loan was needed to address the liquidity crunch in the power company caused by delayed subsidy payments and unpaid power bills.Official sources told The Tribune that board members were informed on Wednesday that banks were willing to extend a loan to the power company without seeking any arranger fee. The bid to raise the loan through a merchant banker had, therefore, become unnecessary.The decision comes at a time when a similar unsecured loan proposed to be raised by the Greater Mohali Area Development Authority (GMADA) is already under scrutiny by the Punjab and Haryana High Court.The tender for raising the loan through merchant bankers was floated on June 15, and the technical bids were opened on July 30. The funds were to be raised in two tranches of Rs 5,000 crore each.Three entities — AK Capital Services Limited, Trust Investment Advisers Private Limited and Real Growth Securities Private Limited — had bid to be appointed as merchant bankers. All three are SEBI-registered Category I merchant bankers.The lowest bid was submitted by AK Capital, which sought an arranger fee of 1.5 per cent of the total fund mobilisation.The other two bidders sought arranger fees of 1.73 per cent and 1.77 per cent of the funds to be raised.