Report of Indian Institute of Public Administration ... - Ministry of Power

Tamil Nadu
Financial Position of the Board
Year 2000-01 2001-02 2002-03 2003-04
(Rs crore)
2004-05
Turnover 7,578.10 8,222.47 9,515.74 11,508.21 12,703.65
PBT (-) 1,055.34 (-) 2,201.79 112.57 -1,110.13 -1,176.77
PAT (-) 1055.34 (-) 2,201.79 112.57 -1,110.13 -1,176.77
Interest paid 643.60 647.68 783.06 887.81 942.19
Equity 100.00 200.00 225.00 425.00 510.00
Debt outstanding 5,524.58 6,492.45 7,096.82 8,694.85 9,070.92
Net worth 3,146.10 1,258.28 1,727.01 1,284.26 603.06
Return on net
worth (%)
-0.34 -1.75 0.07 -0.86 -1.95
Budget subsidy 250.00 322.50 2,212.14 250.00 924.50
Another reason for the poor finances of the Board is the huge power purchase cost it
has to pay to the IPPs. Most of the IPPs use petroleum-based fuel with a pass-through
clause; and with high petroleum prices, the cost of such power is naturally prohibitive.
Under the Power Purchase Agreement (PPA), the Board has to purchase the power or
pay ‘take-or-pay’ charges. Unfortunately, the possibility of such a sharp hike in fuel
prices was not visualised at the time these projects were negotiated.
The Board is in the forefront in harvesting wind energy because of its liberal policies
of power purchase from wind generation and banking support. Its banking policies
have encouraged many industries to go in for wind mills, and as a result, the Board
ends up paying industrial tariff for wind energy, which is much higher than the
recommended tariff of the Ministry of Non-Conventional Energy Sources.
The main drag on the finances of the Board, however, is the free power for the
agricultural sector closely followed by the domestic sector with a slab system.
Although the State Government has to compensate the Board for these losses, it is
unable to do so, and the Board, as an instrument of the State, is helpless in demanding
it from the State Government. The following table gives the tariff structure of the
Board that penalises the industrial and commercial consumers and favours the
agricultural and domestic consumers.
11.3