The Ujwal Discom Assurance Yojana (UDAY), a contentious scheme of the Central government for financial and operational turnaround of electricity distribution companies, did not yield the much-awaited “dividend” last year for the Tamil Nadu Generation and Distribution Corporation (TANGEDCO).
The “dividend,” which the power utility had anxiously looked for, was the reduction of revenue gap or losses. The previous financial year — 2017-18 — was the first full year of implementation of the scheme for the power utility. When Tamil Nadu joined the UDAY in January 2017, it became the 21st State to do so.
Against the targeted revenue gap of five paise, Tangedco was said to have incurred a gap of 27 paise, according to calculations worked out by officials of the Union Power Ministry in charge of the UDAY.
Interestingly, this figure is six paise less than what the State government provisionally calculated and informed the Assembly about four months ago.
A senior policy-maker, who has been observing the State power sector for a couple of years, however, said the final figure of revenue gap is most likely to be higher than what has been arrived at by the Centre. It will be out in a few weeks once the office of Comptroller and Auditor General, which is scrutinising the accounts of the Corporation for the previous year, completes its job.
Tentative figure
In absolute figures, the losses of the power utility for 2017-18 may be much higher than ₹ 2,975 crore, a tentative figure worked out by the Corporation. Officials attributed a number of reasons for the expected wide variation between the estimated figure and the actual.
The primary reason is about 15% hike in the price of electricity that the Central government’s agencies slapped on Tangedco during the year. “Around one-third of the State’s requirements is being met through these Central Generating Stations. On an average, the stations increased the price by 54 paise per unit, a development which we did not anticipate at the time of preparation of estimates,” an official explained.
Another reason is a commitment that the Corporation has undertaken as a sequel to the wage settlement it finalised with trade unions in February this year.
A provision of ₹ 1,200 crore was made to a pension fund, which will become self-sustaining in future to meet the requirements of the growing strength of pensioners, numbering one lakh. And for some more years, the provision has to be made.
Thirdly, high-end consumers have begun abandoning the power utility and getting electricity through open access, a trend which is hitting the Corporation severely. “Otherwise, we would have been richer by ₹ 1,500 crore annually,” a senior official said.
Also, these consumers are increasingly subscribing themselves to group captive power plants, by which they avoid paying cross-subsidy surcharge. Besides, the facility of energy banking, a long-standing issue between the Tangedco and wind energy producers, exacerbates the situation, complained the official. Would all these factors mean that the UDAY has not delivered to Tamil Nadu what it has promised?
“Certainly, no” is the emphatic reply from the official. Even prior to joining the scheme, the State’s performance has been very good in some of the indicators. In a few years, the profile of the power utility is bound to witness a qualitative change and both Central and State governments are monitoring the progress of the Corporation very closely.
As for some other parameters, the political class finds them contentious. Metering of agricultural pump sets and 6% tariff hike to be effected during 2018-19 are a few such parameters.
If there is no progress in respect of them, the State would not get marks accordingly, which would, in turn, reflect on the ranking, the official pointed out, adding that the current poor ranking of the State is due to Tangedco joining the scheme late.
