Tangedco's finances improve as banks reduce interest rate on loans

The Tamil Nadu Generation and Distribution Corporation Limited (Tangedco) has received a huge boost in terms of interest savings as all public sector commercial banks have agreed to lower the interest rate on outstanding loans from 12.3% to less than 11%. This alone will lead to ₹1,500 crore in savings.

Out of the total outstanding, nearly ₹1.4 lakh crore is with Rural Electrification Corporation (REC) and Power Finance Corporation (PFC), and the interest rate is 11%.

“Following talks with public sector banks, we have received information that all the banks have agreed to lower the interest and this is a great boost to our financials,” said a senior Tangedco official.

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Apart from public sector banks, talks have also started with REC and PFC. “If these two companies agree to lower the interest rate, we will be able to settle some debts slowly,” said the official.

Cutting costs and increasing revenue 

Apart from lowering the interest rate of outstanding loans, Tangedco has also reduced the cost of working capital debt. “The interest rate for funds which are being used as working capital has also been lowered. Till now we used to get funds for working capital at 9.5% but now banks have lowered this interest rate also to 8.5%. Through this we will be able to save Rs 60 crore,” said the official.

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Apart from this, Tangedco has changed the way power used to be purchased. “A few years back, we used to purchase power from all sources available just to prevent power shortage. But now we have a policy. Each day only after checking all other sources, we purchase from the Electricity Exchange, where the power tariff is high due to higher demand,” said the official.

“Through this, we are planning to save not less than Rs 600 crore,” said the official.

The discom has started to sell fly ash from its thermal unit premises, thereby earning not less than ₹500 crore. The fly ash is being sold to all cement companies for a cost, except to Tamil Nadu government-owned cement companies, which receive it free of cost.

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It has asked all the thermal units to achieve economies of scale by purchasing repaired parts from one supplier through a tender, thereby saving not less than ₹100 crore each year.

Tariff revision adds ₹1,000 crore per month

The recent revision of the tariff has provided ₹1,000 crore more to Tangedco. “We used to receive not less than ₹3,500 crore each month through the sale of power, but in the month of November we have received ₹4,500 crore and this is due to revision of the tariff,” said the official.