Free power scheme hits Tangedco bottom line

Captive plants another reason for huge loss

Updated - March 05, 2019 07:55 am IST

Published - March 05, 2019 01:03 am IST - CHENNAI

The scheme of 100 units of free electricity, announced by former Chief Minister Jayalalithaa as part of her election campaign during the Assembly election in 2016, has now come to haunt the financials of the State electricity utility. The scheme for all sections of low-tension consumers was brought into force once Jayalalithaa returned as Chief Minister.

Revenues have also dropped with industries migrating to their own captive power plants.

The loss suffered by the Tamil Nadu Generation and Distribution Corporation (Tangedco) for the financial year 2017-18, to the extent of ₹7,760 crore, is being attributed to the reduction in average cost of realisation, both in the high-tension and low-tension categories. The loss of ₹7,760 crore in 2017-18 compares with ₹4,348 crore in 2016-17.

Experts had hoped that in the wake of debt being taken over by the State government under the ‘UDAY’ scheme, the losses would be minimised. However, they have only increased.

Though Tangedco has been able to increase its total revenue by ₹2,578 crore in 2017-18, from a total revenue of ₹56,012 crore in 2016-17, the revenue from the sale of power in 2017-18 has gone down by ₹277.63 crore to ₹43,686 crore.

Lower realisation

The total average cost of realisation from sale of power, which comprised high-tension and low-tension categories, was ₹5.90 per unit for 2017-18 against a surplus of ₹6.22 per unit for 2016-17.

All the revenue-earning categories have taken a hit for the year 2017-18 against 2016-17 wherein the high-tension factories, textile units and software industries paid only ₹7.41 per unit for consuming 24,621 million units (MU) against ₹7.84 per unit for using 23,160 MUs.

In the low-tension category, domestic consumers who forms the major category of consumers, realisation was only ₹3.86 per unit for consuming 25,815 MUs while in 2016-17 the earning was ₹4.56 per unit for 24,681 MUs. The powerloom (to which power subsidy has been provided) revenue was ₹5.36 per unit. The factories, textile units and software industries which had been the revenue-generating category for the electricity utility, consumed 28% of the electricity generated.

A senior Tangedco official said that though there are several reasons for the widening of losses, two main reasons are the free 100 units of power given to all categories of consumers and the migration of high value consumers to open access purchase. As for the first reason, though the scheme was implemented from June 2016, the full impact has been felt only in 2017-18. The official added that the utility had been facing increasing expenditure over the past 5 years.

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