How badly is TNEB doing?

Are consumers responsible for driving the State's power utility into the red?

When the decision to hike power tariffs with immediate effect was announced last week, the financial position of the State's power utility was cited as the primary reason.

So, how badly is the electricity board doing? And who is responsible?

In the last decade alone, the power utility has borrowed in excess of Rs.1 lakh crore, responses to an RTI petition show. Only a third of the amount has been paid back till now. According to Tangedco's balance sheets from the past decade, the power utility also has accumulated losses of nearly Rs.80,000 crore, which puts outstanding long-term liabilities at Rs.1.46 lakh crore.

The present State government has infused some fresh funds through capital assistance and government-backed bonds, but a significant chunk of the money still needs to be paid back – either by consumers through a series of tariff hikes or Tangedco may have to be bailed out with taxpayer money.

Despite the recent increase in power costs for consumers, the power utility is “heading towards financial collapse,” a senior official in the State's electricity regulatory commission said.

Though low consumer tariffs have been repeatedly brought up, the reality is that even if the latest tariffs announced last week had been in place for the last 10 years – the additional revenue would not have been sufficient to meet even a third of Tangedco's current liabilities.

“This clearly shows increasing tariff alone is not going to solve the problem,” says S.Gandhi of the Power Engineers Society of Tamil Nadu. “Consumers are not responsible for [TNEB's] losses,” he said.

“Power supply is erratic and not satisfactory, but still tariffs are being hiked,” said M.G.Devasahayam, a former head of the Haryana Electricity Board. “The State’s energy management system has completely collapsed and consumers are being singled out to bear the burden,” he said.