Delay in tariff revision brings loss to Tangedco

According to sources, Tangedco has been pushing for a tariff revision since 2019. “Presentations were made on the Tangedco’s finance condition to the then Chief Minister Edappadi K Palaniswami. But the government postponed the decision even as the losses kept increasing. After the pandemic and subsequent State polls, the government did not want to revise the tariff,” sources added.

As per the white paper on State finance released by the Finance Minister, Tangedco’s net loss for 2020-21 is Rs 11,792 crore, while its outstanding debt stood at Rs 1.34 lakh crore. It said the primary reason for the losses is due to the average cost of supply works out to Rs 9.06 per unit, whereas, the average rate of realisation is Rs 6.70 per unit in 2020-21, thereby leaving a shortfall of Rs 2.36 per unit.

A senior Tangedco official attributed the mounting losses to the failure to periodically revise the tariff. “The tariff was last hiked in December 2014. Now the gap between the cost of power purchased and the amount realised by the utility has crossed Rs 2.36 per unit,” the official said, adding that the tariff remaining unrevised despite the Uday scheme mandates periodic revision, including bi-annual.

Tangedco sources said the AIADMK government’s implementation of its poll promise of making the first 100 units free for domestic consumers has caused a loss of Rs 2,500 crore per year to the utility. “Before the government made the first 100 units free, the cost of a unit of power was Rs 3.50 for the 100 units but now the government is paying a subsidy of Rs 2.50 per unit only,” the source said. Besides, the high tension – industrial consumers – were moving towards renewable power and there has been a stagnation in the growth of the sale of power, the official noted.

Sources added that Tamil Nadu has the lowest power tariff when compared to the neighbouring states. “Andhra Pradesh and Telangana charge a tariff of over Rs 9 per unit on the domestic consumers in the higher slabs while in Tamil Nadu, it is mere Rs 6.6 over 500 units,” sources noted.