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

Tamil Nadu
• The progress in rural electrification in the State is commendable; the Board is in
a position to achieve 100 per cent household electrification soon.
• Its main difficulty stems from the free power to the agricultural sector and highly
subsidised power to the domestic sector. Although these policies are mandated
by the State Government, the Board has not been able to get full compensation
for the loss it suffers. The State has been able to compensate only to the extent of
five percent. The result is that the financial losses are mounting and are met
through borrowings, increasing the interest burden of the Board.
• Yet another aspect that has an adverse impact on the finances of the Board is the
cost of purchased power from IPPs that are dependent on hydrocarbon fuels.
• The progress on the reform front is however poor in the state. Except for the
setting up of the Regulatory Commission, not much has been done. The Board is
considering only setting up profit centres with no intention to restructuring and
of course no intention to privatise. The State Government’s views have not come
so far, but it can be inferred that the Board is acting on the lines of Government’s
thinking. As of now, it appears that TNEB will remain as it is.
Recommendations
• Although TNEB has achieved many technical and commercial parameters
envisaged under power sector reforms, further progress is possible only through
reform. The Board will be able to achieve further efficiency gains only through
restructuring. It should be restructured into one generation, one transmission and
three distribution utilities. Continuing without any reform will affect the
functioning of the Board adversely. Already there are signs of deterioration in the
quality of supply.
• A mechanism by which the State Government compensates for the loss caused to
the Board because of its policy decisions should be evolved. This is a national
level issue, extremely difficult and tricky. Unless a solution is found to this tricky
issue, the purpose of setting up the Regulatory Commission will not be fully
served.
Responses from TNEB are attached at Appendix. All the questions raised in the
questionnaire are in ‘italics’. The responses from the Government/utilities are in
‘regular font’.
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