TN power tariff hike: Minister cites restrictions on availing loans

He said that the long delay in the commissioning of the power projects has resulted in a drastic increase in capital cost with interest during construction to the tune of Rs 12,647 crore.
Minister Senthilbalaji
Minister Senthilbalaji

CHENNAI: Electricity Minister V Senthilbalaji cited the restrictions on availing central funds and increasing power purchase, fuel and employee costs for revising the tariff after a gap of eight years.

“As per the guidelines of Power Ministry, the tariff revision is a pre-condition for release of funds under Revamped Distribution Sector Scheme (RDSS). If the tariff is not revised, grants to the tune of Rs. 10,793 crore will not be released to Tandegco and the schemes will not take off, ” Senthilbalaji told reporters while announcing salient features of the tariff revision.

He added that RBI has made a prudential guideline to the Commercial Banks, for lending to State-owned power entities should have to file tariff petition by November 30 every year. “Many legal forums like CERC/APTEL have severely remarked about Tangedco’s non-revision of tariff periodically and thereby accumulating outstanding dues to generation companies and other suppliers and contractors,” he said.

The Electricity Minister said that the utility’s outstanding debt which stood at Rs 43,493 crore in 2011-12 has increased by three times to Rs 1.59 lakh crore in 2021-22. “The interest on the borrowed fund has also increased by 259 per cent from Rs 4,588 crore in 2011-12 to Rs 16,511 crore in 2020-21,” he said.

He said that the long delay in the commissioning of the power projects has resulted in a drastic increase in capital cost with interest during construction to the tune of Rs 12,647 crore. “Likewise, many infrastructure works including the erection of substations and transmission lines were carried out without considering the sustainability, analyzing the cost-benefit in an unfocused manner, which had resulted in a huge additional debt burden, ” he added.

Senthilbalaji said that the expenses for purchase of power have increased by 127 per cent, from Rs 16,488 crore to Rs 37,430 crore during 2020-21. Similarly, the expenses on fuel have increased by 21 per cent, from Rs.5,462.80 crore in the year 2011-12 to Rs.6,610 crore in the year 2020-21. Further, in the year, 2011-12 expenses for employees increased by 161 per cent from Rs.4,125.20 crore to Rs.10,777.53 crore during the year 2020-21.

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