Tangedco to get over ₹30,000 crore under Centre’s bailout package

The package is meant to help entities such as the Tangedco clear their dues to Central generation and transmission companies, independent power producers and renewable energy generators

CHENNAI, 28/02/2019 : The power transmission and distribution lines in Chennai on Thursday.February 28. Photo: B. Velankanni Raj / The Hindu

The Tamil Nadu Generation and Distribution Corporation (Tangedco), known for suffering from chronic financial crunches, has been sanctioned ₹30,230.3 crore under the Central government’s COVID-19 liquidity infusion scheme in the light of the pandemic.

Officially called “special long term transition loan to DISCOMs [Distribution Companies],” the bailout package is meant to help entities such as the Tangedco clear their dues to Central generation and transmission companies, independent power producers and renewable energy generators.

A few months ago, the Tangedco sent to the Centre, a revised application for ₹32,682.65 crore against its original request for ₹18,000 crore. This was in response to the Centre’s decision to extend the scheme’s reference date from March 31 to June 30.

The loan will be provided by two Central agencies – REC Limited (formerly Rural Electrification Corporation Limited) and the Power Finance Corporation (PFC). The former will give ₹17,830.3 crore including ₹2,715.15 crore, which pertains to a portion of the PFC’s component of the overall sanctioned loan amount. The remaining ₹12,400 crore will come from the PFC, which is also expected to follow suit shortly.

A communication to this effect was sent on Thursday by Sanjay Kulshrestha, Chief General Manager (State Operations) of the REC Limited to his company’s Chennai office, a copy of which is available with The Hindu . The State government too, was immediately informed of the decision.

Initially, 50% of the sanctioned amount will be released by the two institutions as part of the first tranche. One of the pre-commitment conditions is that a tariff revision petition would have to be filed before the disbursement of the second tranche. Digital payment of power bills, self-assessment by consumers and installation of pre-paid meters at government offices are among other conditions.

According to the Central government, the package marks a “one-time permission” to two of its agencies to lend money for working capital above the ceiling of 25% of the previous year’s revenue of the utility concerned. After extending the reference date, the Centre also increased the size of the liquidity infusion package from ₹ 90,000 crore to ₹ 1.2 lakh crore.