Tamil Nadu   

TNEB’s deficit may touch Rs. 3,000 cr.

CHENNAI: The Tamil Nadu Electricity Board’s revenue deficit is likely to touch Rs. 3,000 crore in the current financial year.

Though the actual figures of the deficit for 2006-2007 are not yet published, the Board is said to have incurred a loss of around Rs. 2,000 crore in the previous year. The exact figures will be out only after the audit of the Board’s accounts is completed by December, says an official. [The Board’s document, Statistics At A Glance: 2006-2007, published in August 2007, mentions the revised estimates for the last financial year. According to it, the deficit is around Rs. 1,585 crore].

The revenue deficit, also called net loss, forces the Board to take loans for meeting revenue expenditure such as fuel cost and power purchase.

The official says that even after taking depreciation off the revenue deficit, the cash loss is likely to stand at Rs. 1,600 crore for 2007-2008. Again, assuming that the Board is likely to net Rs. 800 crore through collection of charges from new connections and revision of compulsory deposits, the shortfall will be around Rs. 800 crore. To tide over it, the Board has to borrow money. That the Board’s financial health is not sound has also been documented by the Power Finance Corporation, which comes under the control of the Union Ministry of Power.

In its report on the performance of the State power utilities for the period from 2003-2004 to 2005-2006, and published in May 2007, the Corporation has placed Tamil Nadu next to Uttar Pradesh and Bihar with regard to book losses (on an accrual basis) suffered during 2005-2006.

The official cites non-revision of tariff as the main reason for the increasing losses. The tariff was last revised in March 2003. But, after the 2004 Lok Sabha elections, the State Government brought the tariff for domestic consumers back to the pre-reform level of 2001, besides restoring free supply for agricultural connections.

To offset the loss, the Government has been giving the Board around Rs. 1,500 crore a year.

There are other reasons, too, for the widening gap between revenue and expenditure. In recent years, the cost and quantum of power purchase from the Central Government utilities and the private sector are on the rise. The Board had to purchase for meeting the rising demand as it did not take up capacity addition projects on a large scale in the last 10 years.

Only now, the Board has initiated some projects. Five years ago, the purchase bill stood at around Rs. 5,700 crore. For the current year, it will amount to Rs. 10,000 crore, the official says.

The organisations such as the Power Finance Corporation feel that the vertically integrated State power utilities should be restructured.

Tamil Nadu is one of the States that have been getting permission for extending the deadline for unbundling.

Experts, including R.V. Shahi, former Union Power Secretary, say that given its record of high rate of collection efficiency and less transmission and distribution losses, the State can turn around easily if it goes in for re-organisation of the Board, besides providing autonomy to bodies to be created in the event of the re-organisation.

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