Rising cost, dip in revenue leave Tangedco with soaring losses

Fond hopes of power managers to improve the revenue situation for the financial year 2017-18 have been dashed, as the Tangedco’s loss has increased to ₹7,760 crore, against ₹4,348 crore in 2016-17. The loss sustained in 2015-16 was ₹5,787 crore.

When the Central government’s UDAY scheme was signed with the State government in January 2017, power managers had hopes of at least breaking even if not making profits for the financial year 2017-18. But the situation has only gone from bad to worse.

Widening losses

While power managers attribute the heavy loss to the 100 units of free electricity and the banking of wind energy, Tangedco’s profit and loss account of 2017-18 shows several factors directly linked to the widening losses, including a dip in revenue from sale of power against a spike in the cost of purchase of power. Besides, the wage agreement increased the expenditure by more than ₹1,852 crore. A senior Tangedco official said the increased dependence on purchase of power from various sources of Central generating stations, non-conventional energy and long-term, mid-term and short-term power purchases, were among the reasons for the power utility suffering huge losses.

On the other hand, Tangedco has been able to only slightly improve its income from the main revenue earner — high tension customers of factories and software industries. The Electricity Department has earned ₹18,253 crore (2017-18) through sale of power to high tension customers by selling 24,621 million units (MUs), whereas in 2016-17 the energy utility was able to earn ₹18,178 crore by supplying only 23,160 MUs. In fact, Tangedco, to earn higher revenue for 2017-18, had to sell more units as the average rate of realisation had reduced by 43 paise per unit from ₹7.84 (2016-17) down to ₹7.41 per unit (2017-18). The revenue from sale of power has reduced, despite the electricity utility selling 85,892 units for the financial year 2017-18, against 83,235 units in 2016-17.

Power managers cite the increasing number of high tension customers opting for captive power plants, wind energy and solar plants for the reduction in the average rate of realisation.

The Wage Pact signed by Tangedco in February 2018 has also had a big impact on revenue, with employee cost increasing by ₹1,852 crore.

S. Gandhi, president, Power Engineers’ Society of Tamil Nadu, said by banking wind energy, and wind mill generators, by opting to become captive power generators, avoid paying cross subsidy surcharges, causing huge loss to the utility.

K. Kasthurirangan, chairman, Indian Wind Power Association, said wind energy was the cheapest energy, at ₹3.05 per unit.

He said at a time when the country was planning to tap renewable energy, the State had the potential to generate 6 lakh mega watt of electricity through it. The State could fully tap the unpolluted energy only if facilities are made available to help more wind generators set up shop, he added.

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