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The Tamil Nadu government-owned electricity generation and distribution company, Tangedco, hopes it will be able to soon clear its dues to wind and solar companies as it expects two developments that would help it do so.
First, the utility has requested the central funding agencies—PFC, IREDA and REC—to provide bridge loans so that it may clear its dues. A senior official of Tangedco has told Business Line that the utility has told the funding agencies that they may pay Tangedco’s creditors directly— and Tangedco would take the loans on its books.
The utility has requested for about ₹2,000 crore for immediate payment. Tangedco owes around ₹2,000 crore to renewable energy companies and around ₹14,000 crore on the overall, to its power suppliers and other contractors.
In response, the central government has asked Tangedco for a clear road map detailing how the utility intended to improve its financial position and pay back the loans. To this, the Tamil Nadu government has given a letter of comfort stating that it stood fully behind Tangedco and requested the financiers to “please not put the squeeze on Tangedco”.
The request is pending with the financiers, but Tangedco is hopeful of some relief.
The second development that Tangedco expects is an approval by the state electricity regulator, the Tamil Nadu Electricity Regulatory Commission (TNERC) for its request for more subsidy from the state government.
Looking for relief
The official said that since the utility has not been able to recover its costs fully through tariffs, it should get more subsidy from the state government. (In September 2019, the regulator approved a subsidy of ₹8,053 crore to be paid to Tangedco by the Tamil Nadu government. Of this, ₹4,172 crore was on account of free power supplied to farmers, and another ₹3,279 crore because of free or subsidized power supplied to domestic consumers.)
Once these developments take place, Tangedco would start clearing its dues, the official said.
The official pleaded helplessness over Tangedco’s inability to meet its obligations, saying that a good 95 per cent of the costs the discom incurs is non-discretionary – such as coal prices, tariffs for transportation of coal, salaries and interest costs. Whatever Tangedco could do in terms of reducing the costs it could control, it has done already, he said, noting that the utility managed to bring down the ‘aggregate technical and commercial (AT&C) losses to 14 per cent, from 18.4 per cent in 2014.
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