Tangedco's interest payment on the rise as total debt increases to over Rs 1 lakh crore
The rate of interest on borrowings made by Tangedco has been on the increase each year in the last 4 years, as per data furnished in the tariff petition to TNERC.
While the interest rate in 2018-19 was 9.82 per cent, the rate increased to 10.24 per cent in 2019-20 and then to 10.45 per cent in 2020-21. Due to the interest, outgo is also on the rise thereby preventing Tangedco from using its own revenue for working capital.
Tangedco submits that it has a basket of loans which are very difficult to identify for each of the capital work in a distribution and generation segment. In such cases, no separate loans can be identified for separate projects.
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“The Centre has sanctioned a new loan of Rs 30,230.29 crore in 2020-21 as per the liquidity infusion package. Out of this, Rs 3,434.99 crore alone is yet to be released by the Rural Electrification Corporation (REC) and Power Finance Corporation (PFC),” said tariff petition.
Total debt over Rs 1 lakh crore
The total interest expenditure for 2018-19 was Rs 8,248.90 crore based on a debt of Rs 92,411 crore. The same increased to Rs 9,356.48 crore in 2019-20 as the total debt increased to Rs 1,07,513 crore and the rate of interest also increased to 10.24 per cent for this year.
The interest amount of Rs 9,356.48 crore includes Rs 591.25 crore paid as interest on loans taken in the name of working capital.
In 2020-21, the interest payment increased to Rs 10,837.87 crore at the rate of 10.45 per cent and the total amount includes Rs 510.77 crore paid towards loans taken for working capital. The total debt at the end of 2020-21 was Rs 1,23,299 crore. Each year, Tangedco is borrowing more than what it repays. As a result, total debt has been on the rise along with the interest outgo.
“We have shown the financial situation of Tangedco in the tariff petition. Unless the tariff is revised, we will not be able to get any financial support from the REC and the PFC. Funds from these two financial companies are needed to set up thermal units. Following the increase in losses each year as well as the debt crossing Rs 1.45 lakh crore, the Reserve Bank of India recently asked these two companies not to provide any loan to Tangedco,” said a senior Tangedco official.
Thermal projects facing problems
Following the RBI decision, thermal projects set to come up at Uppur and the second phase of thermal projects at Udangudi are facing problems as there are no funds to set up these projects.
“We need to increase the thermal capacity as the state has only 4,320 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.
“We expect an increase of Rs 16,491 crore each year once the tariff is revised. This financial year, less than Rs 10,000 crore revenue is expected as two quarters will be over when the revised tariff comes into effect,” said the official.
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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.
