Tamil Nadu continues to effort to reduce debt of TANGEDCO, says official

Loan outstanding with TANGEDCO is Rs 80,000 cr of which Rs 7,200 cr is debt to state govt

The efforts of Tamil Nadu government to reduce debt of Tamil Nadu Electricity Board (TNEB) contine, with the government planning to take over debt in bonds worth Rs 2,000 crore of Tamil Nadu Generation and Distribution Corporation (Tangedco) during the year 2015-16.

Owing to the increased capital spending on capacity development, the overall debt of TNEB has gone up to over Rs 80,000 crore, from around Rs 40,000 crore in 2010-2011.

"The debt position of Tangedco is Rs 73,000 crore, which is the loan outstanding from financial institutions. Debt to the government is around Rs 7,200 crore. A total of about Rs 80,000 crore is the loan outstanding with Tangedco," said K Shanmugam, principal secretary, department of Finance, Tamil Nadu government.

Besides, Tamil Nadu Transmission Corporation Limited (TANTRANSCO), the transmission entity of TNEB, has also borrowed Rs 7,800 crore to invest in capacity expansion in power distribution. The corporation took up the task of establishing a vast network of high capacity transmission lines in the state with an estimated Rs 6,000 crore.

However, the financial restructuring plan of the government to save the electricity board was on its course, said the official.

"The restructuring plan of the government has worked. If you see the Budget speech, we are committed to take over Rs 6,353 crore, and we have repaid Rs 1,000 crore in the current year. Next year, we will repay another Rs 2,000 crore, which is going on as usual," said Shanmugam.

Under the financial restructuring plan, the government has agreed to take over Rs 6,353 crore of Tangedco debt bonds floated in 2013-14. The government has already taken over Rs 1,000 crore of Tangedco bonds and had repaid the same during the current financial year, said chief minister O Panneerselvam in his Budget speech delivered in the state Assembly on March .

“Every year they are spending around Rs 10,000 crore as capital investment, for which they have to borrow,” said Shanmugam.

The government has earmarked a total financial support of Rs 13,586 crore for the power sector in the Budget Estimates 2015-2016. It has extended Rs 11,748 crore of support to TANGEDCO in the fomr of subsidy, share capital, cash loss financing, debt servicing and debt take over during 2014-15.