Tangedco to discuss bifurcation, creating RE entity

CHENNAI: The board of the Tamil Nadu Generation and Distribution Corporation will discuss the recommendation put forth by the consultant, Ernst&Young (EY), to bifurcate the utility into separate generation and distribution companies, on Saturday.

The consultant was appointed by Tangedco in 2021 to study its financials and recommend suggestions for its improvement and to provide better services.

According to sources, the EY report would be discussed in the board meeting on September 9 and its recommendation would be submitted to the State government.

“Any decision on the creation of separate generation, distribution and renewable energy companies, which the consultant suggested, would be taken by the government,” sources added.

The consultant’s recommendation was based on Tangedco’s present financial condition, with its outstanding debts touching Rs 1.44 lakh crore as of March 31, 2023.

“While the Tangedco’s focus is mainly on distribution sector, the huge losses accumulated over the year has impacted the investment in generation projects due to the high interest charged on loans.

Hence, EY has suggested the formation of separate generation and distribution companies to access low-interest loans. At present, we are paying an interest of 11 per cent, which will come down to 9.5 per cent,” the sources added.

EY has also recommended forming a new renewable energy company by merging the Tamil Nadu Energy Development Agency (TEDA), which mainly focusses on the promotion of non-conventional energy sources, sources said.

Formation of a separate RE company would help access much cheaper funding for the projects, sources added.

The State government has charted an ambitious target of meeting 50 per cent of the State’s total energy needs through renewable energy.

It has planned to install 20,000 Megawatt of solar energy by 2030 and also set up 5,000 MW of wind power under public-private partnership arrangement.