The power utility in Tamil Nadu must accurately assess the subsidy on agricultural service connections and improve its infrastructure to stem its losses, according to the Comptroller and Auditor General of India.

In its audit report for 2010-11, tabled in the Assembly today, it says the Tamil Nadu Electricity Board and subsequently after its unbundling, the Tamil Nadu Generation and Distribution Corporation Ltd, face a revenue shortfall of Rs 12,950 crore. This was ten times higher than its shortfall five years previously.

The Electricity Board supplied over 50,159 million units in 2006-07 and this increased to 59,658 million units in 2010-11.

The power utility supplies nearly one-fifth of power free due to the State Government’s policy. The major segments of subsidised power were agricultural connection which contributes just 4 per cent of the cost of supply and domestic supply which pays about 40.48 per cent of the cost of power supply.

On agriculture connections, the subsidy realised from the State Government is just about 10 per cent of the cost. The short fall was Rs 11,020 crore in the four years from 2007-08 to 2010-11 because the power utility’s subsidy claim is based on service connections rather than actual consumption.

The CAG report points out another reason for the revenue shortfall is the dependence on independent power producers who supply costlier power as the utility’s own generating capacity declined and the steep increase in interest and finance charges.

In the five year period its power generation declined to 2,646 MW from 3,092 MW previously. But the demand increased to 8,544 MW from 6,988 MW earlier.

The unit cost of operation increased to 5.68 in 2010-11 from Rs 3.45 five years earlier as it had to buy power.

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