Tamil Nadu electricity minister V Senthil Balaji plans to avoid ‘extravagant’ spending on power purchase and strengthen the state-run power utility within three years.
In an interview with Julie Mariappan he talks about his plans to transform Tamil Nadu from a power-deficit state to a power surplus one.
Excerpts: Q: Where does TN stand now in the power sector?The electricity board has reached a state of near total shutdown.
The board is burdened by a debt of `1.6 lakh crore with `15,000 crore interest per annum.
This debt burden has increased over 10 years and our job now is to rescue the utility.
They (the previous government) obtained loans to repay the loans at a rate of interest that ranged between 9.6% and 13%.
The governor’s address to the assembly clearly mentioned that Tangedco and Tantransco are facing severe financial crises due to mismanagement in recent years.
A study of the finances and governance structure will be carried out.
We are now in talks with banks to reduce the rate of interest and in the process save `2,000 crore.
How can we run the administration with payment of interest of this size? The AIADMK kept saying TN is a power surplus state.
How could they have claimed that when 4.2 lakh farmers are waiting for connections under free power, tatkal and other self-financing schemes? Neither were they able to generate power nor give connections.
Their objective was to reduce generation and procure power at a high rate from private players.
They managed the situation with the state’s share from central generating stations.
To me, Tamil Nadu is a power deficit state, since we could not meet the requirements on our own and purchased power at a higher rate.
We are purchasing power even now.
It is ok if you say you buy electricity at a low cost in the country and it is less than your generation cost, but purchasing at a higher rate and calling it surplus is unacceptable.
Q: The CAG report pulls up public sector undertakings for giving undue benefit to contractors and incurring wasteful expenditure, thereby causing loss to the exchequer.
Your comment?There was criticism when the DMK purchased power.
But it was at an average rate of `3.58 per unit.
In the last five years of the AIADMK government, power was purchased at `5.02 per unit.
In certain cases, they purchased at `7 per unit.
The CAG report detailed the way the power sector undertaking suffered losses.
The previous government should have controlled the expenses.
Our action will be based on the study outlined by the governor in his address.
We have embarked on a mission to reduce the losses and ensure the minimum cost of production of a unit is between `3 and `3.5 from our installed capacity and private players.
Q: The power sector undertakings get substantial financial aid from the state by way of equity, interest-free loans and grants.
Why does the aggregate net worth continue to remain negative?Assets are created based on the cost estimates, but the management will decide on its fate.
If they could generate only 2,400MW despite augmenting installed capacity of thermal stations, it means there is something wrong.
Q:How do you plan to clear Tangedco’s massive debt?First, we have to provide uninterrupted power supply to the people.
The debt burden cannot be solved in a day, week or month, but it can be sorted out within a certain period.
There is a need to implement new schemes to generate power at a lesser rate.
It will take one or two years upon which the purchase can be reduced.
We have to get ready for alternative generation plans and it requires time.
In future we can certainly steer the management without losses like what the CAG said, and avoid paying high rates of interest and taking loans.
We have to increase our generation and revenue.
It can be called a service department only if it delivers to the people, not by spending extravagantly on power purchase.
Our aim is to reduce the debt burden of `1.6 lakh crore in a gradual manner and see there are no losses in the sector.
Q:Is revision of power tariff on the cards?It has been only two months since we took over and the administrative machinery led by the chief minister is relentlessly working on Covid prevention.
The CM has begun department-wise review.
We are assessing how to reduce expenditure and serve the people with the support of government funds and grants.
Q:There are frequent complaints of power cuts.
How do you plan to deal with it? There was no maintenance in the last nine months of the AIADMK regime, leading to power outages.
Now we have taken up work on a war-footing and power shutdown is only to maintain the infrastructure.
Monthly maintenance of two to three hours a day is unavoidable.
We will work towards providing uninterrupted supply.
Q:Tangedco is unable to meet the requirements without additional purchases from private parties.
How do you plan to reverse that?In the past five years, the previous regime could give only 51,700 connections for streetlights and water schemes.
The earlier DMK regime gave 1.7 lakh connections.
Breakdowns recorded during the DMK regime were 17.8 lakh while it was 53.9 lakh in the AIADMK in the past five years.
The DMK gave 45.4 lakh power connections for all categories, but the AIADMK gave only 46 lakh connections despite dubbing it a power surplus state.
There were 2.04 lakh connections for farmers in the five years of the DMK, but in the 10 years of the AIADMK regime, they gave only 2.08 lakh connections.
The DMK gave 1,357 high tension (HT) service connections but the AIADMK gave 1,267 HT connections.
The AIADMK lacked administrative efficiency and that is what the governor’s address to the assembly pointed out.
They call it a service department, but everyone knows who it served.
Q:You have alleged a scam in the previous government in power purchase.
On what do you base your allegations?Their aim was to purchase power instead of continuing the DMK schemes.
For instance, they floated a tender for 1,000MW for 15 years, but signed an agreement for 3,300MW in 2013.
The average fixed cost itself was `4.9 per unit.
Today, we get power at `3, `3.25 and `3.5 per unit.
It is surprising that they signed for a long-term purchase at a higher rate.
These are the reasons for additional expenses.
Q:By how much did Tangedco’s installed capacity increase in the past 10 years and what are the plans to meet the estimated peak demand?The installed capacity was 5,600MW when the DMK exited in 2011.
It increased to 7,158MW during the AIADMK regime after implementing the three DMK schemes.
A plant was decommissioned in between.
The board manages with the share of 5,800MW from central generating stations and power purchase.
The AIADMK purchased four lakh million units through private players in the past five years, while the DMK purchased only two lakh million units in five years.
The projects in Ennore (1,200MW), North Chennai (800MW), Udangudi (1,320MW) and Kundah pumped storage hydro-electric project (500MW) will be completed in three years.
Q:What is the priority of the government?Our CM wants the state to become power surplus.
He has directed us to give power connections immediately to farmers and industries.
We are working towards restoring the energy sector, prevent losses and make the state power surplus.