Tamil Nadu

₹16,000-crore aid for Tangedco hangs in balance

Representational image.  

The Centre is holding up the release of around ₹16,000 crore to the Tamil Nadu Generation and Distribution Corporation (Tangedco) under an assistance programme following its differences with the State government over the implementation of certain conditions.

Sanctioned ₹30,230 crore in October last year under the Special Long Term Transition Loan to Discoms (Distribution Companies) as part of the Centre’s response to the COVID-19 pandemic, the Tangedco is to get the assistance through the Power Finance Corporation (PFC) and the REC, both coming under the control of Union Power Ministry, at concessional rates in two tranches. According to officials, the Tangedco has been given ₹14,000 crore in the first instalment.

Centre’s rider

There are a few conditions that have come in the way of the disbursement of the funds, according to officials. As a pre-requisite to availing the assistance and as a condition at the time of release of the second instalment, the power utility should have filed a tariff revision petition with the Tamil Nadu Electricity Regulatory Commission (TNERC) for 2020-21.

As this condition has not been fulfilled in the light of the previous AIADMK regime not willing to take any risk in an election year, the Central agencies have conveyed to the State government that the latter has to bear the losses to be suffered by the power utility during 2021-22.

Last year (2020-21), the Tangedco’s cash losses were estimated at about ₹18,000 crore. As the power utility is said to be suffering an average loss of about ₹2.2 per unit, its losses are expected only to go up this year too when the economy is reeling under the impact of the second wave of the pandemic, which is regarded as being more virulent than the first.

The State government’s position is that it is willing to absorb 50% of the losses as agreed to when it had decided to join the Ujwal DISCOM Assurance Yojana (UDAY) in early 2017. At that time, it was decided that the State utility should achieve break even in three years, failing which the State government would step in to bail out in the fourth year by way of 50% absorption of losses.

While the State government feels that the 50% stipulation can be stretched to one more year in the absence of any such reference on 100% absorption, the Central authorities are saying that what is applicable for the fourth year cannot be applied to the fifth year (2021-22). Besides, Tamil Nadu is not being treated differently from other States under similar circumstances as the conditions have been framed, keeping the entire country in mind, explains a senior official of the PFC.

However, Tamil Nadu, whose “fiscal health is precarious with persistent high revenue and fiscal deficits,” as stated in a Government Order issued on Monday, cannot afford the 100% absorption of the Tangedco’s losses. Conscious of the difficulties being faced by his new government, Chief Minister M.K. Stalin in his memorandum submitted to Prime Minister Narendra Modi last week, sought his intervention in getting the second tranche released by relaxing the conditions.

Meanwhile, the State authorities are about to award a contract for conducting a study of finances and governance structure of the Tangedco and the Tamil Nadu Transmission Corporation.

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Printable version | Jul 31, 2021 10:26:37 PM | https://www.thehindu.com/news/national/tamil-nadu/16000-crore-aid-for-tangedco-hangs-in-balance/article34896197.ece

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