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Electricity finance reform at last

I am happy to see welcome steps towards correcting a few of the issues that have long been crying for attention. Important among these is the state resisting to fall in line with the reform of the state’s electricity policies. The state initially resisted the much needed reforms of its electricity board (later TANGEDCO), refused to form the state electricity regulatory commission introduced by the NDA1 government, delayed it for years, and even after the formation, manned it with subservient officials as members. Tamil Nadu again delayed as long as possible to separate generation, transmission and distribution. 

For decades, there were few attempts made at viably operating the TNEB. In 1989, the DMK offered free power for agriculture. The subsidy shot up from Rs. 200 crore per annum to more than 25 times over the next 25 years. Along with expanding the subsidy to domestic consumers and  charging very high tariff for industry and commercial users, the failure to adjust tariffs to cost and the neglect for almost 15 years from 1992 to 2007 to spend on fresh capacity generation, forced purchase of power at huge cost. These have cumulatively increased the losses that today exceed Rs. 100,000 crore. The UPA government, needing the DMK’s support for survival, did not bother to correct this colossal mismanagement. 

Piyush Goyal as Power and Coal Minister in the Modi government introduced a new scheme Ujwal Discom Assurance Yojana (UDAY) to assist state electricity administrations to bring about uniformity and rational financial administration offering to provide finance support. It also aims to reduce losses and eliminate them over a period of time. Happily, the state has understood the logic and imperative for this and has fallen in line with UDAY with few modifications to safeguard the states interest. This is an extremely important and welcome step that would correct the maladministration of the board through the Dravidian rule. 

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