Policy

‘Tangedco saved ₹157 cr by chartering of ships’

Our Bureau Chennai | Updated on September 07, 2021

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State Energy Department’s policy note suggests ways for departments to reduce loss

Tamil Nadu Generation and Distribution Organisation (Tangedco) saved ₹157 crore by chartering ships directly to transport coal to power stations by sea from various coal mines in other States.

“This was achieved by way of lower administrative and charter hire rates as a result of direct payments to the ship owners,” said Tamil Nadu Energy Department’s Policy Note for 2021-2022.

Coal is transported by sea route from the load ports of Paradip and Vizag to the discharge ports at Ennore, Karaikal and Tuticorin. Since 1985, Poompuhar Shipping Corporation Ltd has been chartering (hiring) vessels on behalf of Tangedco.

The agreement with Poompuhar Shipping to transport coal expired on March 31, 2021. “Hence, Tangedco chartered seven special vessels for the coastal movement of coal. This resulted in the savings,” the Policy Note said.

Additional coal

Meanwhile, in future, 25 lakh tonnes per annum of coal is proposed to be purchased additionally from Singareni Collieries Company Limited through Fuel Supply Agreement.

As there has been a continued shortfall in coal supply from the Indian coal companies in the previous years, various representations have been made to the Ministry of Coal and Ministry of Power, requesting them to instruct Coal India Limited for arranging to supply coal as per the agreed quantities to sustain generation at thermal power stations of Tangedco.

Coal import

The steam generators of the upcoming Super Critical Thermal Power Projects are designed for operation with coal having maximum ash content of 26.5 per cent. Hence, it is essential to import coal with low ash content and blend it with domestic coal for operating these power plants.

“For the operation of the North Chennai Thermal Power Project – Stage III, it is proposed to procure imported coal to an extent of about one million tonnes per annum through long term coal procurement,” the Policy Note said.

Mounting losses

The Tamil Nadu Transmission Corporation Limited (Tantransco) , an electric power transmission system operator owned by the State government, has incurred losses for seven years during the past 10 years.

Due to this, the accumulated losses have increased to ₹6,782.35 crore as on March 31, 2021. The estimated revenue loss for the current financial year 2021-22 is ₹1,778.17 crore. “The outstanding loans as on March 31, 2021 was ₹25,568.73 crore,” the Policy Note said.

Tantransco’s total losses have increased due to increase in interest servicing, repayment of the capital and meeting revenue expenditure in absence of tariff revision and also, the outstanding bills has to be settled. It also incurred losses due to interest on loans taken for capital and revenue expenditures.

This increased expenditure is still managed from the tariff rate revised during 2017, which has resulted in loss and liquidity deficit. Due to this, outstanding bills for an amount of about ₹400 crore is pending to be settled to various suppliers and contractors.

The transmission company is also negotiating with financial institutions such as HUDCO, Rural Electrification Corporation and Power Finance Corporation to reduce the interest rate on the existing outstanding loans and new loans. “Even a reduction of 150 basis points in the interest rate on the existing outstanding loans, will result in savings of approximately ₹265 crore per annum,” the Policy Note said.

Published on September 07, 2021

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