With Power Tariffs Revised, TANGEDCO Hopes to Bridge Its Burgeoning Revenue Gap in Three Years – EQ Mag Pro
CHENNAI: Even as the state-owned discom Tangedco’s debt burden has been estimated to be 1.59 lakh crore till the financial year 2021-22, the Tamil Nadu Electricity Regulatory Commission (TNERC), in its latest tariff order, has stated the tariff revision has been envisaged only to neutralise the annual revenue deficit by financial year 2025-26.
With the old tariff system, the revenue gap is projected to be 23,877 crore for 2022-23, which is expected to come down by half to Rs 12,504.64 crore by implementing the new tariff system along with subsidy by the state government and release of funds under UDAY scheme for the rest of the financial year.
A Tangedco official told TOI that Tangedco is expected to break even from 2024-25 after which the loans would be settled with the surplus revenue in a phased manner to bring down the interest.
With the new tariff system, Tangedco is expected to make surplus revenue of 901.24 cr in 2025, 3,289 crore in 2026 and 7,928.61 crore if the annual tariff revision is implemented at about 4 per cent.
The state government had absorbed the annual deficit of 13,000 crore for the financial year 2021-22, without which the regulatory asset would be much more.
To regulate the losses and other expenditure, Tangedco had borrowed to the tune of 1.59 lakh crore for which an annual interest of 16,511 crore is paid.
In the tariff petition, Tangedco had stated the regulatory asset (loss) alone is more than 1.10 crore, but TNERC disallowed some of the expenses and arrived at over 89,000 crore.
“To regularise the existing regulatory asset, there are only two options; we should either go to the public or the government. The utility and TNERC will hold discussions with the state government to decide on how to liquidate the asset,” said the official.
However, there are other factors that might affect the projectile if not addressed, said another Tangedco official.
With the reduction offixed charges for MSME sector, Tangedco’s projected revenue will fall short by 3,500 crore and it may take another year for the utility to break even, said the official. “Also, we need to improve on the efficiency including the manpower ratio as per the Central Electricity Authority’s norms and optimum utilisation of plants to cut down on the cost in order to achieve the projected growth. The borrowings should be controlled. Otherwise, we will be in the same situation even after five years. And we should negotiate with lenders to reduce interest rates through which we can save 800 crore to 1,000 crore. If the coal prices are increased, which is likely, it will have an impact on the revenue margin,” said the official.
Source: PTI
