Insisting that the existing institutional framework of Tangedco is functioning smoothly, State Electricity Minister P. Thangamani has said that the State government has no plans to carry out reforms whereby the power utility would be divided into a power generation company and regional distribution companies.
Asked whether the State government intended to carry out these reforms in light of the outstanding loan of the distribution wing of Tangedco having been absorbed by the government, the Minister told The Hindu on Sunday that no such move was being contemplated, adding, "As of now, the existing institutional framework is functioning smoothly. There is no problem.”
The idea of splitting Tangedco into a power generation company and regional distribution companies is nothing new. In October 2010, the Tamil Nadu Electricity Regulatory Commission (TNERC) advised the government to set up four distribution companies (DISCOMs) with headquarters in Tiruchi, Chennai, Madurai and Coimbatore, akin to the State Transport Corporation. Giving an account of how other States had progressed in implementing such reforms, the Commission argued that there would be “greater operational efficiency and consumer satisfaction” if these reforms are carried out. TNERC had emphasised that the proposed companies should be government-controlled.
However, a senior Tangedco official pointed out that with the free power supply scheme in place, benefitting around 20.6 lakh farm pumpsets, the establishment of regional DISCOMs would not garner the desired results, as the entities headquartered in Tiruchi and Madurai, with a huge base of rural consumers, would be perpetually making losses and only the ones in Chennai and Coimbatore would be profitable. Another official contended that it would only lead to additional administrative expenditure.
All these years, the idea was not pursued because there was either the problem of acute power shortage or the poor state of finances of the power utility, said another section of officers, including one former chairman and managing director of Tangedco. They took the view that the current vertical organisational set-up is getting overstretched as the total customer strength has crossed the 2.7 crore mark, which includes nearly two crore domestic consumers.
At present, there is neither the problem of power shortage, nor the availability of funds. Capacity addition and free availability of contracted power, coupled with the sluggish demand for energy, has made the State’s power situation comfortable.
By joining the Ujwal DISCOM Assurance Yojana (UDAY), a scheme meant for operational and financial turnaround of State-owned DISCOMs, Tangedco is expected to make savings of about ₹5,800 crore from the coming year and begin making profit by 2018-19.
The amount of savings has been worked out taking into account the State government absorbing Tangedco’s debt of ₹22,815 crore, accounting for 75 per cent of the loan of ₹30,420 crore outstanding as on September 30, 2015, and the Corporation deciding to convert the remaining ₹7,605 crore into bonds. Also, the State government has granted approval for converting its loan of ₹3,352 crore into equity share capital. With all these measures, Tangedco no longer has to make interest payments and principal repayment on its debts.
Notwithstanding these reasons for carrying out the reforms, the Minister has ruled out the possibility of taking them up.
