Smart Meter: Cancelling Adani tender likely to cost TN Rs 30,000 crore

CHENNAI: Tangedco’s decision to scrap the smart meter procurement tenders is likely to hurt the State government financially, with the State being denied additional borrowing up to 0.5 per cent of its GDP, estimated to be around Rs 30,000 crore, for not meeting targets set under the Centre-funded Revamped Distribution Sector Scheme (RDSS).

In addition, the Rs 9,000 crore sanctioned for Tamil Nadu as gross budgetary support under RDSS could be forfeited and converted into a loan for failing to meet the set performance targets.

Out of the 19.79 crore smart meters sanctioned across the country under the scheme, Tamil Nadu was allotted the highest of 3 crore meters. But so far, it has not installed even a single one.

As DT Next reported on December 31, Tangedco cancelled all four tenders, including the first package in which Adani Energy Solution emerged as the lowest bidder, on December 27 and 28.

Under RDSS, additional borrowing would be allowed only if the states meet the eligibility criteria for each year and then meet the performance target for each phase of the project, including awarding the contracts, and installation and commissioning of the meters.

Sources told DT Next that Tangedco would write to the Ministry of Power to extend the deadline for project implementation. Not only Tamil Nadu, but most states are lagging in meeting the targets set by the union government, sources said, expressing confidence that tender cancellation would not have any financial implications.

“Soon a retender would be floated with more packages to ensure the participation of more bidders,” sources said.

At the meeting of State Finance Ministers in June, Finance Minister Thangam Thennarasu urged Union Finance Minister Nirmala Sitharaman to exclude the loans taken by State governments for taking over losses of Discoms from the calculation of fiscal deficit and borrowing ceilings of the State.

“Currently, to get an additional borrowing space of 0.5 per cent, which is Rs 30,000 crore, the State government should take over Rs 52,000 crore of Discom’s losses,” he had said in the memorandum.

The revamp scheme was launched in July 2021 with the main objective of supporting distribution utilities to improve operational efficiencies and financial sustainability of the distribution sector to provide a quality and reliable supply of power.

The scheme has two major components - loss reduction and smart metering. Under the first one, Tangedco has awarded a Rs 9,307.64 crore project to take up works, including agricultural feeder segregation, high-voltage distribution system, etc.

The bids for smart meter component were floated in August 2023 to install 3 crore smart meters, 4.72 lakh distribution transformers metering, 16,974 feeder metering and 1,300 boundaries metering.

Union Power Minister Manohar Lal told the Rajya Sabha on December 2 that the scheme, which links central assistance to the State’s performance, was designed to nudge states to undertake necessary power sector reforms.