Tangedco split into three to reduce debt and improve efficiency
CHENNAI: The Tamil Nadu Generation and Distribution Corporation (Tangedco) has been restructured into two entities, Tamil Nadu Power Generation Corporation Limited and Tamil Nadu Power Distribution Corporation Limited, with the former focusing on thermal power generation and the other on distribution.
Additionally, Tamil Nadu Green Energy Corporation Limited has been merged to the existing Tamil Nadu Energy Development Agency, as per energy secretary Beela Rajesh’s order issued on January 24 and released on Friday. The entities will operate under the Companies Act of 2013.
TNIE had reported in August 2023 that EY India, a leading consulting firm, had been appointed to submit a report on splitting the state-owned power utility to reduce the debt and improve operational efficiency.
The government clarified that the intention of adopting this approach is not to establish multiple distribution companies (discoms).
New company can also give access to green energy funds
Tangedco, in the order, stated, “Many states are pursuing both models — single discom and multiple discoms. Most states with the single discom model have achieved similar operational efficiency as the states with multiple discoms.
Further, with the ongoing IT reforms in the power sector and the inevitable digitisation of the distribution network in the next few years, a single entity with a common IT backend provides a more conducive setup for integrated operation of the distribution network.”
The order justified the need to restrict state-owned power utility by saying, “States including Odisha, Haryana, Rajasthan, UP, Karnataka, Gujarat, AP and Telangana have already aligned the business structure with the power sector value chain by having separate companies in the area of generation, transmission, and distribution.
As per the order, the newly formed green energy company will not only be helpful to fast-track the state’s energy transition plans but can also give access to green energy funds to ease the liquidity concerns.
The green energy company’s key function is to own, operate, and maintain all existing and upcoming assets related to hydro generation, pumped hydro, and all clean and renewable energy projects. Besides, the company will act as single window clearance for developers.
Tangedco being in top five in business ranking of India, third in revenue, and fourth in energy sold, aims to provide operational relief. Dedicated management for generation and distribution businesses is anticipated to enhance efficiency in steering these critical aspects.