CHENNAI: With rapid industrialisation and urbanisation of the State over the years, the rising need for power has put tremendous pressure on infrastructure and resources of the Tamil Nadu Generation and Distribution Corporation (Tangedco). The need for additional budgetary allocation is rising every year as the State power utility, which has a loan burden of more than Rs 1,50,000 crore and average annual revenue gap of Ts 12,000 crore, has to spend crores on new poles, transformers, EB meters and substations for new connections each year.
Tangedco has been treated by successive governments as an extension of their welfare arm and over the past three years, the gap between total revenue and total expenditure was Rs 12,623 crore (2018-19), Rs 11,964 crore (2019-20) and Rs 12,685 crore (2020-21). While Tangedco spends Rs 9 on each unit of power towards generation, distribution and salary, the revenue it earns per unit is only Rs 7, leading to an aggregate average loss of nearly Rs 12,000 crore per year for the past three years.
This has necessitated that the State government not only increases its budgetary allocation but also comes up with policy proposals in the current budget to make Tangedco a self-sustaining entity through tariff changes that meet the cost and stop evergreening of loans, say experts.
According to BMS (electricity wing) all-India president R Muralikrishnan, Tangedco incurs huge expenditure for providing free electricity to over 22 lakh agriculture pumps and nine lakh huts across the State. It also needs additional funding for establishing and servicing these connections.
The corporation gets funds from the Centre under Revamped Distribution Scheme and also takes loans from Power Finance Corporation, Rural Electrification Corporation and Indian Renewable Energy Development Agency. “In the 2019-20 financial year, the power utility incurred a Rs 12,000 crore loss. The year before that, the loss was Rs 12,623 crore. Though the State government had promised to bear 50 per cent of this loss, very little has been paid so far.”
According to a senior Tangedco official, the Tamil Nadu government is paying Tangedco a flat rate of Rs 2,875 per horsepower (HP) for agriculture motors irrespective of the actual power consumed since farm connections are not metered. The State has also been offering several free schemes, such as 100 units of free power for domestic consumers and special concessions in power tariff for looms and hutments.
The PSU has received Rs 8,000 crore towards subsidy component from the State government last year. Of this, 50 to 60 per cent is for agriculture services. If the government makes a policy decision to install meters for all farm power connections, it would be easy to track and bill them and Tangedco’s losses can be brought down, the officer said.
Despite generating revenue of more than Rs 70,000 crore every year, the PSU has been struggling to repay loans and service its interest. The State government must consider allocating more funds to Tangedco to bring it out of the red, the official said.
