The Tamil Nadu Generation and Distribution Corporation (Tangedco) is hopeful of securing Central assistance under a package of special liquidity infusion for power distribution companies (discoms).
“We are expecting the Centre’s nod in a week,” a senior official said, adding that the power utility had revised its requirement from the original estimate of around ₹18,000 crore to ₹30,000 crore. The package is meant to help discoms clear dues to Central generation and transmission companies, independent power producers and renewable energy generators.
The official’s response was sought to ascertain whether the Centre had suspended the approval process in the light of non-revision of power tariff for many years.
First tranche by October
As and when the Centre clears the State’s request, the Power Finance Corporation (PFC) and the Rural Electrification Corporation (REC) are expected to follow up the matter with their approvals by October 15 and release the first tranche by the end of October.
The first tranche would be equivalent to 50% of the amount of assistance approved by the Central government for the State. The balance amount would be given subject to adherence to stipulations laid down by the Centre.
The condition on bridging the gap between the Average Cost of Supply and the Average Revenue Realisation is going to be a major issue for the State government, which has dodged power tariff hikes for many years.
The increase in the State power utility’s requirement followed the Central government’s decision to provide a one-time permission to two of its agencies, PFC and REC, for extending loans above the ceiling of working capital of 25% of the previous year’s revenue to discharge their liabilities as of June 30, 2020.
A communication sent by the Union Power Ministry to the States a few weeks ago recalled that the 25% stipulation was imposed as part of the Ujwal Discom Assurance Yojana (UDAY), a 2015 scheme of the Central government aimed at facilitating the operational and financial turnaround of discoms.