Debt-hit Tangedco to hike long-due power tariffs in TN

Tangedco, the electricity generation and distribution arm of the Tamil Nadu government, has finally decided to bite the bullet, with the state government giving its nod to the discom to revise tariffs which were last done in December 2014.

When the DMK came to power, Tangedco’s debt crossed ₹1 lakh crore. As the discom incurred losses over the years, the debt crossed ₹1.45 lakh crore, and at this point the Reserve Bank of India recently asked Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) not to provide any further loan to Tangedco.

With no elections around the corner, the government felt this was the best time to allow Tangedco to revise the tariff.

“Even the by-elections to some rural wards have been completed and the next election is only in 2024 when the Lok Sabha elections are to be held. We found the present time to be best to revise the power tariff,” said a senior secretary.

Unless the tariff is revised, the REC and PFC won’t give financial support which is needed to set up thermal units, the secretary said.

Following the RBI decision, thermal projects set to come up at Uppur and the second phase of thermal projects set to come up at Udangudi were stalled.

Also read: Tangedco needs to hike own thermal capacity to cater to new investors in TN

“We need to increase the thermal capacity as the state has only 4,314 MW of thermal capacity, lowest among big states like Maharashtra or Gujarat. Unless we increase the thermal capacity, it will be difficult to provide continuous power supply to new companies which are set to come up in Tamil Nadu,” said the official.

However, the revised tariff will not come into effect immediately.

“As of now, we have sent the proposal to Tamil Nadu Electricity Regulatory Commission (TNERC). The TNERC will hold hearings across all four regions of the state and based on the recommendations and suggestions from various consumers, a final decision on the tariff will be announced by September or October,” said a senior Tangedco official.

Based on the revised tariff, Tangedco expects an increase of ₹16,491 crore in revenue each year.

“This financial year, less than ₹10,000 crore revenue is expected to increase as two quarters will be over when the revised tariff comes into effect,” said the official.

He said the nitty gritty of how to deal with those who surrender the first 100 units free is being worked. “We need to separate the domestic consumers based on those who enjoy the first 100 units free and those who have surrendered. We are working on it,” said the official.