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TN Inc prescribes bitter pill to tide over severe power crisis

The looming power crisis has pushed the Tamil Nadu Inc to the wall. Fearing a substantial loss to the bottom line due to production losses.

The looming power crisis has pushed the Tamil Nadu Inc to the wall. Fearing a substantial loss to the bottom line due to production losses, they are knocking the state government?s door for immediate action.

As industrial production is likely to hit the state GDP, the state government should undertake a series of short-term measures to manage the raging power crisis, said N K Ranganath, chairman of Tamil Nadu CII. ?We plead for measures like VAT-free furnace and diesel oil enabling micro and small industries to meet their power needs from their own gensets at much more competitive rates. The VAT waiver could very much bring down the oil retail cost from R11-13 to R9. The government should think over the possibility of power purchase from captive producers at a competitive rate of R9 per kilowatt-hour. Given the crunch scenario, the government can openly declare a 40% power cut and re-introduce power holiday and carry out the power transmission on a rotational basis, thus enabling the industries to plan their productivity in advance,? he said.

Divulging the deficit picture, he said that of the total 10,237 mw installed generation capacity in conventional mode, which includes hydro, thermal, gas and nuclear source, the actual output is close to 8,000 mw. On the non-conventional energy side, of the total 7,297 mw installed generation capacity from sources like biomass and wind, the latter alone accounts for 6,548 mw. The present output from wind, of the 6,548 mw is only 1,200 mw, thanks to seasonality of wind weather pattern resulting in generation and evacuation constraints.

Speaking on the financial streamlining of agencies like Tamil Nadu Transmission Corporation (TANTRANSCO) and Tamil Nadu Generation and Distribution Corporation (TANGEDCO), which are under the holding company Tamil Nadu Electricity Board (TNEB), Ranganath said the agencies are saddled with a debt of R40,000-50,000 crore towards power producers, and are paying a very high interest rate of 10.75%. ?Debt deterioration should be redeemed by resorting to urgent measures like tariff revision and rethink on free power to unmerited sections of farmers and low-income households. On the demand-side management of power in farming, the 3 billion units consumed for irrigation purposes could be drastically slashed by 50% with the installing of energy-efficient pumps. The end of Koodankulam logjam could greatly ease the supply-side shortage,? he said.

TNEB had moved power regulator Tamil Nadu Electricity Regulatory Commission (TNERC) in November seeking nod for a 38% tariff hike . With an outstanding debt of R40,300 crore, the power utility has been trying to wriggle out of the financial mess by way of measures including re-structuring of loans from nationalised banks. Punjab National Bank recently re-structured the loan given to TNEB by way of extending the loan repayment period to five years from earlier one year. Besides, the state government has been infusing small amounts of funds to the power utility to meet its daily needs.

According to analysts tracking the sector, a tariff hike can generate an additional revenue of R8,200 crore for the state utility.

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First published on: 14-02-2012 at 02:02 IST
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