CHENNAI: The Rural Electrification Corporation (Tantransco) Limited has sanctioned Rs 850 crore to the Tamil Nadu Transmission Corporation (Tantransco) to establish 54 new substations across the state and strengthen the transmission network.
A senior official told TNIE, “Tantransco recently signed the agreement with REC, and the funds are expected to be released shortly. We have planned to construct 54 new substations, each with a capacity of 110 kV, in various locations, including Chennai”.
He added that Tamil Nadu’s electricity requirement has been growing by about 6% every year. “By 2030, the state’s power demand is expected to cross 27,541 MW. To meet the rising demand, it is necessary to expand our infrastructure. Construction work will begin as soon as the funds are released,” the official said.
The loan has been issued at an interest rate of 9.25%.
Another official said the state’s power sector requires investments of more than Rs 2 lakh crore over the next five to seven years to upgrade facilities across generation, transmission, distribution and storage. However, he also noted that Tantransco and distribution and generation companies together have a total debt burden of about Rs 1.7 lakh crore, which is a major concern.
Currently, around 80% of the capital expenditure of the state’s power utilities is funded by REC and Power Finance Corporation. The interest rates charged by these financial institutions range from 9.25% to 12.65%, which, the officials said, are high. “We pay around Rs 7,000 crore as interest every year to these institutions. The state government has urged the union government to consider reducing the rate to around 8.5%, on a par with that of banks,” another official said.
Narayanan Tirupathi, Director, REC, told TNIE that REC has so far provided nearly Rs 80,000 crore to Tamil Nadu’s power utilities for strengthening transmission and distribution infrastructure. “In some projects, we have already reduced the interest rate by 1% for existing loans. The REC board will take a call on requests for further reduction,” he said.