The ever-growing burden of power purchase is the major contributor to the decline of the Tamil Nadu Generation and Distribution Corporation's (a successor entity of the Tamil Nadu Electricity Board) financial health over the years.
In terms of volume of energy purchased, the increase in 10 years (from 2001-2002 to 2010-2011) was close to three times. In terms of cost of power purchase, it was around 4.3 times.
What was more significant was that even as late as 2006-2007, the share of power purchase in the total revenue receipts was around 60 per cent. Now, it is over 85 per cent.
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As the proportion grew since 2006-2007 and the financial position became precarious, the TANGEDCO or its predecessor, TNEB, had to resort to short-term loans for meeting other costs towards fuel, operation and maintenance and establishment.
Now, the average cost of power purchase is Rs. 50 crore a day. It is expected to go up to Rs. 60 crore as summer approaches, says an official.
Essentially, the TANGEDCO purchases power from four sources – Central generating stations, independent power producers (IPPs), renewable energy plants (private wind mills and co-generation plants) and power exchanges and traders. The per unit cost ranges from Rs. 2.15 (in the case of organisations such as Neyveli Lignite Corporation) to Rs. 12.5 (in respect of IPPs running liquid fuel-based plants). During this summer, the per unit cost of power, purchased from the open market, was as high as Rs. 16 per unit.
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While the present demand is around 10,500-11,500 megawatt (MW), the availability is around 8,000 MW. The shortage of 2,500 MW to 3,500 MW had to be managed through measures, including power purchase, power cut and load shedding.
Experts point out that the TANGEDCO could have avoided, to some extent, the purchase of high-cost power if scheduled load shedding had been introduced in Chennai even a few years ago. In 2008, for a brief period, the city had load shedding for one and a half hours. It was only in April this year it was re-introduced even though other parts of the State suffered at least two hours of load shedding.
The experts say that the question of imposing load shedding in Chennai even in the midst of poor power availability is viewed as a political issue.
The fundamental problem is that there has been inadequate capacity addition for the last 15 years. After the third unit of the North Chennai Thermal Power Station was commissioned in February 1996, the TNEB had carried out negligible capacity addition. In the last five years, the capacity addition was 206 MW, according to the revised budget for 2011-2012. Besides, the power utility had to buy power, on a long-term basis, from some of the IPPs, which had been using fuel such as naptha.
What has worsened the situation this year is that contrary to the estimate of capacity addition of about 2,000 MW, only 165 MW was added to the share of the TANGEDCO, of which 95 MW comes in the form of the State's share from the Simhadri power plant in Andhra Pradesh and 36 MW from the Kaiga atomic power station in Karnataka. The TANGEDCO's hydropower projects of Bhavani Kattalai and Periyar-Vaigai provide 34 MW. The power utility was banking on the commissioning of one unit of the Kudankulam nuclear power project, which would give about 460 MW to the State. But, the ongoing agitation against the project has created a situation of uncertainty and the date of commissioning has been postponed.
The authorities are hopeful of getting around 225 MW from the Neyveli Lignite Corporation's two new units and around 360 MW from the Vallur plant during the remaining period of the current financial year.
The official says that the lesson that the TANGEDCO has learnt in the current crisis is that it should continue to take up generation projects.