TNEB pushed deeper into the red

Deficit in this fiscal pegged at Rs 8,738 cr.

M. Ramesh Business Line

Chennai, March 10

Rising costs are nibbling away at the Tamil Nadu Electricity Board's entrails, pushing the board deeper into the red.

For the current financial year, the board expects a deficit of Rs 8,738 crore. Since this is after assuming a ‘reasonable return' of Rs 347 crore, the actual economic loss of the board is expected to be Rs 8,391 crore.

This situation is not surprising given that 22 per cent of the electricity it generates is given away for free and another 18 per cent is lost in transmission.

The state-owned electricity utility owns 5,690 MW of installed capacity, to run which it employs well over 70,000 people. It also has over 85,000 pensioners to pay for. The annual wage bill for 2009-10 comes to Rs 2,580 crore which, incidentally, is projected to go up to Rs 3,146 crore by 2012-13.

Due to lack of investments in capacity addition for several years, TNEB needs to purchase power from central generating stations, independent power producers in the State and from the open market to meet the needs of the State. This causes another huge burden on revenues.

In the current year, the Board will spend Rs 15,774 crore on this account. This is set to increase to Rs 16,527 crore in 2010-11 and Rs 15,141 crore in 2012-13.

Capacity generation

The Board is “making continuous efforts” to add generation capacity, it says, but in 2009-10, the total addition to capacity will be a paltry 99 MW. The addition to capacity next year will be slightly better — 690 MW. The following year – 2011-12 – is expected to see a more healthy addition of 1,200 MW.

Tamil Nadu consumed 53,065 million units of electricity in 2008-09 and is expected to consume 56,698 million units in the current year. Given that the demand for power is growing by 8-10 per cent each year, TNEB would have to rely increasingly on purchased power to meet the demand. In fact, that is the board's stated policy.

In its petition to the State Electricity Regulatory Commission seeking tariff revision, it says that its strategy is to “conserve and maximise the precious internal resources for the much-needed investment in transmission and distribution by leveraging the investments capacity of central utilities such as NTPC, NLC and NPCIL as well as private sector in generation to its fullest possible extent.”

This is expected to strain the balance sheet of the board further, because the average cost of power purchased is higher than average realisation per unit.