Tangedco's outstanding debts mount to Rs 1,23,895.68 cr by 2019-20: CAG

Non-renewal of Power Purchase Agreement at the TNERC approved rate of ₹ 3.50 resulted in additional expenditure of ₹ 149.02 crore.
Tangedco's outstanding debts mount to Rs 1,23,895.68 cr by 2019-20: CAG
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CHENNAI: The outstanding debts of the State power utility Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) increased to Rs 1,23,895.68 crore by the end of 2019-20 from ₹81,312 crore in September 2015, the Comptroller and Auditor General of India said on Tuesday.

The debts mounted due to the partial takeover of debt, failure to convert 25 per cent debt into bonds and increase in borrowings for generation project by 87.05 per cent and working capital by 189.88 per cent during five years ending 2019-20, a CAG report said. TANGEDCO had to pay ₹503.28 crore to banks/FIs as overdue and penal interest as a result, said the report for the year ended March 31, 2020 on TANGEDCO’s performance tabled in the Assembly today The performance audit was taken up to assess the performance of TANGEDCO for achieving financial turnaround as well as the targeted operational improvement and intended outcomes envisaged in the tripartite MoU and the scheme.

The State government, against its obligation to take over 75 per cent of the debt, had agreed to take over only 34.38 per cent. Consequently, TANGEDCO was saddled with a loan of ₹ 30,502 crore, which resulted in additional interest burden of ₹ 9,150.60 crore. In respect of the remaining 25 per cent debt i.e., ₹ 7,605 crore, TANGEDCO was required to issue State government guaranteed bonds with lesser interest.

“This was not agreed by the government of Tamil Nadu. Consequently, the loans carrying higher rate of interest were continued resulting in additional interest burden of ₹ 1,003.86 crore,” the report claimed.

The gap between the Average Cost of Supply (ACS) and Average Revenue Realised (ARR) should have been brought to zero by 2018-19. Instead, it increased from ₹ 0.60 (2015-16) to ₹ 1.07 per unit (2019-20) and the total shortfall during 2015-20 worked out to ₹42,484.70 crore, the report further explained.

Though TNERC had directed TANGEDCO to complete the process of providing meters to all the hut and agricultural consumers by June 2012 and September 2012 respectively, TANGEDCO failed to do that and claimed subsidy based on number of service connections and Horse Power basis respectively resulting in loss of revenue of ₹1,541.49 crore.

The principle of Merit Order Despatch was not scrupulously followed in scheduling of power by State Load Despatch Centre resulting in procurement of power at additional expenditure of ₹ 28.45 crore during 2018-20.

Non-renewal of Power Purchase Agreement at the TNERC approved rate of ₹ 3.50 resulted in additional expenditure of ₹ 149.02 crore.

Further, there was under-reporting of AT&C loss in the range of 2.24 to 3.41 percent during 2015-20. The value of energy lost as per CEA’s method of calculation was ₹ 6,547.25 crore, it said.

In the report, the CAG recommended the State government and TANGEDCO to review and restructure the debts to reduce the interest cost, submit tariff petitions to TNERC regularly, calculate the AT&C losses accurately as per the methodology prescribed by CEA to have better control over it.

“TANGEDCO may work out a plan of action for feeder segregation with a focus to reduce the AT&C loss,” the report suggested.

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