Tamil Nadu to appoint consultant to transform power utility

“To improve the overall financial and physical performance of Tangedco and Tantransco, a detailed Organisational Transformation Study funded by the government will be undertaken during 2020-2021 financial year,” said a senior Tangedco official.

Tantransco has invited expression of interest for shortlisting the consultants to undertake strategic study on Tamil Nadu power sector. The last date for submission of bids is October 7. The official said the study would make strategic recommendations on various issues, including meeting the expected demand for electricity at the least cost and facilitating further development and utilisation of renewable energy while judiciously utilising the existing generation capacity.

On the financial part, the study would recommend reducing the subsidy burden on the State coffers, cross subsidies and improving cost recovery, and also restoring the financial viability of the sector, the official said. Besides, the study would also devise strategies to achieve short-term and long-term efficiency gains in performance parameters.

The State government would enlist a strategic consulting firm to support the Finance and Power departments to develop a restructuring strategy for the power sector and also support other operational requirements of Tangedco and Tantransco to meet the new financial and regulatory reporting requirements and enhancement of financial management capacity.

A senior official from Tangedco’s finance wing said that the biggest obstacle in turning around the discom was the lack of political will to periodically hike tariffs. “Due to non-revision of tariff since 2014, Tangedco has been suffering huge losses year after year. We are losing about Rs 2.2 per unit sold – the the average cost of supply stands at Rs 8 per unit while the average cost realisation is only Rs 5.8 per unit,” the official said, adding that unless the discom was allowed to fix tariff, Tangedco would continue to suffer losses.