BRS regime threw Telangana power sector into debt trap: Congress govt

The financial health of the power sector in Telangana is precarious and a matter of grave concern due to the “imprudent practices” of the previous BRS government, the state government alleged on Thursday (December 21).

Deputy chief minister Bhatti Vikramarka Mallu said only one power project with an installed capacity of 1,080 MW — Bhadradri Thermal Power Station (BTPS) — was conceived and commissioned in the past 10 years.

This too was done after an inordinate delay and a cost overrun using low-efficiency subcritical technology, he said while releasing a white paper on the power sector in the Assembly.

This was the second white paper in a series that contemplates making public what happened during BRS chief minister K Chandrashekar Rao's regime.

The first paper, on state finances, was released on Wednesday.

A white paper on mismanagement in the irrigation sector with special reference to the Medigadda barrage is also on the cards. According to sources, it was put on hold as the PIL on the barrage sinking was pending before the High Court.

Power and coal

Talking about another power project of 4,000 MW in Nalgonda district (Yadadri Thermal Power Station), the minister said it was taken up at a location far removed from the coal mines, leading to avoidable coal transport costs of over Rs 800 crore per annum.

This would further escalate with time and would be applicable over the entire lifetime of the project, he added.

According to the white paper, at the time of Telangana’s formation, the installed generation capacity of TSGENCO (Telangana State Power Generation Corp Ltd) was 4,365.26 MW.

Before the formation of the state, generation projects had been conceived and initiated with a capacity of 2,960 MW. The commissioning of these projects after the formation of the state had been critical in providing a reliable power supply. The delay in the execution of these projects had put the burden on the exchequer.

In addition, special provisions in the Andhra Pradesh Reorganisation Act 2014 regarding the power sector enabled the state to get over 1,800 MW of power beyond the installed capacity in the state then.

Government’s dues

The power utilities were made to suffer losses and bear the burden of spiralling debts because the previous government had given short shrift to clearing the dues of various government departments.

“The accumulated losses of distribution companies (Discoms) as on March 31, 2023, stand at Rs 62,461 crore. The Discoms have a debt of Rs 81,516 crore (as on October 31, 2023). Of this, an amount of Rs 30,406 crore has been borrowed as working capital primarily to pay power charges to 29 generators,” the deputy chief minister said. Despite this, Rs 28,673 crore of generation and transmission dues remain to be paid by Discoms.

He said the difficulty faced by Discoms in paying power purchase bills had been aggravated by the default of the government in paying the power bills of its departments which had now mounted to Rs 28,842 crore.

“The amount due from lift irrigation projects such as Kaleswaram alone is Rs 14,193 crore. The government’s default in paying committed true up charges of Rs 14,928 crore has mainly contributed to the further deterioration of Discom finances,” he said.

He also narrated how the mismatch in the estimates of the Telangana State Electricity Regulation Commission (TSREC) and the Discoms had also contributed to the latter’s financial difficulties.

Financial burden

“The estimate adopted by TSERC for agricultural power is lesser than the estimate submitted by Discoms. As a result, a lesser subsidy for agriculture is being provisioned as per the tariff order. The difference has resulted in a financial burden on Discoms,” he said.

According to Mallu, the additional cumulative financial burden on Discoms due to the difference in the estimate of agricultural power was Rs.18,725 crore as on March 31, 2023.

All the questionable practices, he said, have resulted in accumulated losses by Telangana state Discoms that rose to Rs 62,461 crore as on March 31, 2023 from Rs 12,186 crore on June 2, 2014.

Against the backdrop, merely to keep the power supply going, the Discoms had to resort to borrowings regularly, which have now reached unsustainable proportions, the deputy chief minister alleged.

“There is very limited scope to continue to fund the purchase of power through these means. Discoms are now finding themselves in a debt trap due to the failure of the government in paying its dues and commitments to the sector,” Mallu said.

He assured that the government would strive to provide quality and reliable power to the people despite inheriting the legacy of “financial imprudence” from the previous government.