“Financial crisis being faced by TANGEDCO very alarming”

Chief Minister Jayalalithaa has sought from the Centre a special package of Rs. 40,000 crore to bail out the Tamil Nadu Generation and Distribution Corporation (TANGEDCO).

This is required to wipe out the debt burden of the Corporation and bring down the accumulated losses so that the TANGEDCO can continue to provide effective and efficient service to the public, she said in a memorandum submitted to Prime Minister Manmohan Singh on Tuesday.

The memorandum described the financial crisis being faced by the TANGEDCO as “very alarming” and stated that the crisis might cause “a complete breakdown in its functioning due to the problems faced in cash management and debt servicing.”

Referring to the present shortage of around 11,500 megawatt (MW), she said the availability of power included the purchase of about 1,800 MW from the open market. The purchase of such a huge quantum of power on a daily basis had caused substantial financial strain to the TANGEDCO. Its accumulated loss had gone up from Rs. 4,900 crore in 2005-2006 to Rs, 38,000 crore as on March 31, 2011. Similarly, its outstanding debt rose from Rs. 9,300 crore in 2005-2006 to Rs. 40,300 crore in 2010-2011.

An official says that as part of its efforts to extend financial support to the Corporation, the government has agreed to release Rs. 1,317 crore which includes Rs. 927 crore towards tariff subsidy and Rs.390 crore towards equity contribution. Of this amount, the Corporation will give Rs. 800 crore to independent power producers and Rs. 350 crore to wind energy producers.

Besides, the latest issue of bond has so far fetched in Rs. 543 crore. The merchant banker has sought the extension till June 30 to mop up Rs. 900 crore as over-subscription, the official says, adding that the total limit for mobilisation is Rs. 1,400 crore.

In her memorandum, Ms Jayalalithaa requested Dr. Singh to allot adequate funding to establish 10 solar energy parks to generate 3000 MW and put up solar-powered street lights in villages under the Jawaharlal Nehru Solar Mission. The cost of the projects would be about Rs. 45,000 crore. She also wanted the Centre to provide support under National Clean Energy Fund for the “path-breaking initiatives” of the State government.

She also urged him to speed up the execution of the 4,000-MW Cheyyur Ultra Mega Power Project and consider taking up more Central power generating stations in the State.

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