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Huge under-recoveries continue

Tamil Nadu had passed through a severe power crunch through 2012-13. This was the result of the neglect of making adequate investments in power in three successive plans the eighth, the ninth and the tenth.

Even when corrections were made to step up investments in the subsequent plans, humongous delays suffered in implementing the ambitious projects landed the state in an unprecedented crisis. These delays extended to six to seven years for the Kudankulam Nuclear Power Project to 56 months for the Neyveli TPS II and 45 months for Tuticorin thermal plant. The least delay of 15 months was suffered by the Vallur thermal plant Phase II and the Mettur thermal power station.

The massive under-recoveries of power supply due to the reckless policy of heavy subsidisation without due and timely compensation from the state budget, landed TANGEDCO with humongous losses cumulatively adding to over Rs 41,000 crore.

Madras Chamber of Commerce & Industry, with the expert lead of ICRA Management Consulting Services Ltd and in cooperation with the India Energy Forum has been focusing on the power situation in the state. The annual conference participated by some of the best energy experts of the country like former Power Secretary Anil Razdan, former Chairman and Managing Director of NTPC, PS Bami, who along with D V Kapur, built NTPC into a global power producer and senior leaders from major power generation and equipment producers in the country have been presenting a clear picture of the state’s power position.  

While there has been relief over the substantial improvement in the power position today compared to 2012 - the crisis year, when the state, except the capital, suffered long hours of scheduled and unscheduled power cuts, still there are severe constraints. The conference summarised these; Excerpts:

•    Power supply situation has improved significantly with the energy deficit reducing from 17.5 per cent in FY 2013 to 5.9 per cent in FY 2014. Thermal power capacity is expected to expand by 8000 MW during the 12th plan, 2012-17.

•    The conference suggested a long term power procurement plan, securing access to fuel sources over the long term and creating adequate transmission corridors. The last one is of special significance. The state suffered serious disabilities due to transmission constraint within the state, within the region and inter-region. Even today the state suffers from its inability to utilise fully the wind power and solar power created with great imagination. Bami pointed to the delay further compounded by the inability to utilise effectively the Sholapur-Raichur 765 KV line recently commissioned by Power Grid Corporation to transfer power from the north-eastern grid to southern region.

•    The ambitious Vision 2023 document that envisages economic growth of 11 per cent per annum very much depends upon the rapid expansion and utilisation of the energy sector.  In this, the targets of 20,000 MW of thermal power and 10 MMTPA of LNG capacity and a gas grid assume importance. In both these, planning and execution sights are tardy.

•    Though the state is the first to opt for the financial re-structuring plan of its electricity utility, the progress does not seem to be adequate. The regular revision of tariff to cover costs, the bridging of gap between average cost of supply and average revenue realised, timely audit of accounts are not progressing to the desired extent. The tariff revision being a sensitive issue with political parties in total opposition to any revision, TANGEDCO has been finding it extremely difficult to ensure full recovery of costs or to make good the shortfall by budgetary support – the finances of the state are in themselves not in great shape. The state immersed fully in a subsidy culture with agriculture enjoying free supply of power for 25 years and gross under-recovery from domestic consumers, faces stiff resistance for any tariff revision. Already tariff levels are pretty high.

•    Sadly, despite the state creating handsome capacity for wind power of close to 8000 MW, lags in transmission system, a fair policy of payments for power purchased and transmission bottlenecks lead to  gross under-utilisation of the handsome capacity created. Even in regard to solar power, though the state was among the earliest to announce a policy, it has not delineated the details to perfection. The result is a poor growth in solar capacity.

As in the previous two years the Power Minister listed to inaugurate the conference was a no show.  Sadly, there was no participation by the state’s power utility or the power administrators.


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