Tangedco’s board clears three-company proposal

CHENNAI: Starved of funds, the board of Tamil Nadu Generation and Distribution Corporation (TANGEDCO) on Saturday decided to accept the recommendation by consultant Ernst & Young to bifurcate the utility into separate generation and distribution companies, and also to create a new renewable energy company. The final call in this regard would be taken by the State government, sources said.

The State-run power utility had appointed the consultant in 2021 to study its financials and recommend suggestions for its improvement and to provide better services. The consultant’s recommendation was based on Tangedco’s present financial condition, with its outstanding debts touching a whopping Rs 1.44 lakh crore as of March 31.

Sources said EY has also suggested the formation of separate generation and distribution companies to access low-interest loans. “At present, we are paying an interest of 11 per cent for the loans, which will come down to 9.5 per cent or lower if the separate companies are formed,” sources added.

The consultant has also recommended the creation of a new renewable energy company by merging the Tamil Nadu Energy Development Agency (TEDA) which is mainly focused on the promotion of non-conventional energy sources, sources said.

The State has an ambitious target of meeting 50 per cent of its total energy needs through renewable energy by 2030, and has planned to install 20,000 Megawatt of solar energy by 2030 and also set up 5,000 MW of wind power through public-private partnership basis.

If separate companies are formed by bifurcating Tangedco, it would be the second such exercise for the utility, after the TNEB was unbundled into Tangedco and Tamil Nadu Transmission Corporation (Tantransco) in 2008.

However, the trade unions are strongly opposed to the Tangedco board’s decision to accept the formation of separate companies.

Alleging that the unions were kept in the dark and that they only know that Ernst & Young has submitted its report but we did not know its content, T Jaisankar, president of the Central Organisation of Tamil Nadu Electricity Employees that is affiliated to the CITU, said any such move would trigger to unrest among workers.

“Tangedco cannot take any unilateral decision without consulting the trade unions. As per the Industrial Disputes Act, any decision taken by the management without consulting the trade unions would be illegal. If the management decides to implement the recommendation on its own, it would lead to unrest among workers,” Jaisankar said.

Tangedco board is headed by its chairman and managing director Rajesh Lakhani and comprises eight members, including part-time directors - Tantransco managing director, and principal secretaries of Finance, Energy and Industries Departments.