Tangedco owes more than ₹70,000 crore to REC, PFC

Tamil Nadu’s electricity distribution company Tangedco owes ₹71,906.64 crore to Rural Electrification Corporation and Power Finance Corporation as of November, against loans received towards financing its thermal power projects and payments off power generators during the Covid lockdown.

Though the two finance companies have released more than ₹70,000 crore, Tangedco has dues of more than ₹20,000 crore towards power generators.

“Power Finance Corporation Ltd. (PFC) and REC Ltd. (formerly known as Rural Electrification Corporation Ltd.) sanction loans to utilities, including Tangedco, keeping in view the merits of the individual proposals,” said a senior REC official.

The two companies were ordered by the Centre to release financial support to discoms to tide over the liquidity issues arising out of Covid. The Government of India had announced a Liquidity Infusion Scheme (LIS) with reform linkages.

“Under the scheme, special long term transition loans worth ₹26,428 crore have so far been disbursed by PFC and REC to Tangedco as on November 30 to clear its outstanding dues of Central Public Sector Undertakings (CPSUs), generating companies (Gencos) and transmission companies (Transcos) as well as independent power producers (IPPs) and renewable energy (RE) generators,” said the official.

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Tangedco had sought a total of ₹30,230 from the two companies to pay off power generators.

As per the agreement between Tamil Nadu government and the Centre, the loan would be provided by REC and PFC. While REC would give ₹17,830.3 crore, PFC would fund the remaining ₹12,400 crore.

This package is a one-time grant from the two Central agencies given towards working capital and allowed above the ceiling of 25% of the previous year’s revenue of the utility. 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.

The reform conditionalities mandated under the LIS include payment of current subsidy by state government in advance to Tangedco every quarter, that the discom shall submit quarterly accounts of utilization of subsidy given in advance and balance subsidy available or due to be received from state government, installation of smart prepaid or prepaid meters in state government departments, companies, bodies and urban local bodies by 2023-24.

One other condition was that the Tamil Nadu government must take over at least 50% of financial losses of 2020-21 in 2021-22 and 100% of financial losses from 2022-23.

The Centre has decided to increase the capacity of Kudankulam Power Plant from the current 2000 MW to 6000 MW and Tamil Nadu share will increase accordingly, said the official.