The Tamil Nadu Department of Energy signed a Memorandum of Understanding (MoU) with the Union Ministry of Power in January 2002 on power sector reforms. The agreement committed both the State and the Centre to the reforms.
One of the milestones identified by the agreement was to achieve break-even in the current operations in distribution by March 2003. However, Tamil Nadu is not even in a position to dream of it.
A decade later, an audit shows the Tamil Nadu Generation and Distribution Corporation (Tangedco) incurred Rs. 11,679 crore in loss during 2012-13.
One of the major sources of revenue for the Tangedco is the money from the sale of power. It was about Rs. 26,000 crore during 2012-13. The utility bought power for Rs. 25,740 crore. The cost of generation was Rs. 6,614 crore.
“There is something called the average purchase cost. It is the cost of production per unit based on the cost of generation and power bought. At present, this cost is Rs. 5.50 a unit,” says an official familiar with the Tangedco’s finances.
Stating that the unit cost of generation was not higher than that in some other States, Tangedco officials admit that it will be a cause for concern in the long run, especially if there is a push towards renewable energy, especially solar energy.
The Tangedco spends about Rs. 4,000 crore on employee cost and Rs. 5,500 crore on interest and finance charges. This adds another Rs. 10,000 to its expenditure account. While the total income was Rs. 31,467 crore, the expenditure was Rs. 43,742 crore during 2012-13, leaving a deficit of Rs. 11,679 crore. The same year, the Tangedco’s net worth was Rs. (–) 26,248 crore and working capital was Rs. (–) 15,594 crore.
The accumulated loses have more than doubled in the past five years to Rs. 38, 480 crore. Of the State’s 64 Public Sector Undertakings, 19 incurred a loss of Rs. 14,232 crore during 2011-12 and the Tangedco lost Rs. 13,321 crore.
Twice, the State government — read the Jayalalithaa-led AIADMK government — increased power tariff. After the 39-0 drubbing in the 2004 Lok Sabha elections, the increase effected a year earlier was rolled back.
During the DMK regime in 2010, a partial revision was carried out. It targeted high-end domestic consumers. In April 2012, a major hike was effected.
“The Tangedco continues to suffer losses for every unit generated and distributed even as we speak,” admits a senior Tangedco official.
Can it be bailed out?
“It is a political decision. Remember, this is a welfare state.”
( Additional reporting by Ajai Sreevatsan )
