TWAD owes Rs 1,518 crore to TANGEDCO

As per the white paper released by state finance minister PTR Palanivel Thiyaga Rajan, subsidies rose from Rs 4,841 crore in 2006-07, which was 12.65% of revenue expenditure and 1.48 percent of GSDP, have risen faster to Rs 62,338 crore in 2020=21, which is is 27.06% of total revenue expenditure and 3.21% of GSDP.

He also pointed out that the power subsidy was the highest at 1.10% of GSDP among all other subsidies, which was alarming owing to the money lost by the government due to losses suffered by TANGEDCO/TRANTRANSCO.

TANGEDCO incurs Rs 9.06 per unit electricity supply cost; recovers Rs 2.23 per unit; Putting the total outstanding liabilities of TNEB/TANGEDCO at Rs 1.34 lakh crore (Including TN loan Rs 4,582 crore and UDAY loan of Rs 4,563 crore), the finance minister said the losses of TANGEDCO primarily increase because of the average cost of supply of electricity works out to Rs 9.06 per unit, whereas the average rate of realization was only Rs 6.70 per unit, leaving a shortfall of Rs 2.36 per unit.

On an average, TANGEDCO recovers Rs 2.23 per unit from domestic consumers with tariff subsidy at Rs 1.09 per unit, against the total supply cost of Rs 9.06 per unit, which leaves an under-recovery gap of Rs 5.74 per unit, he said, adding that the total loss on account of domestic supply was Rs 18,735 crore in 2020-21.

Unsurprisingly, TANGEDCO was only the major government institution eating into the finances of the govt. Going by the white paper, TWAD, corporations and TNSTC also contribute substantially to the alarming financial situation. For instance, high increase in pension cost (TWAD pensioners number is thrice its workforce of 2,583) and maintenance cost of combined drinking water supply schemes lead to sustained increase in costs over the last ten years for TWAD (Tamil Nadu Water Supply and Drainage Board).

The main contributing factor to deficits is gross under recovery of operational costs. The operational cost is Rs 20.81 per kiloliter, while only Rs 10.42 and Rs 8.11 per kilo liter is levied by urban and rural local bodies, respectively towards water charges in 2020-21, Thiaga Rajan said, adding that TWAD Board has an outstanding liability of RS 2,890 crore, including Rs 1,518 crore towards payment of electricity dues to TANGEDCO. Outstanding liabilities of Chennai Metro Water alone was Rs 1,909 crore, including Rs 1,522 crore towards outstanding government loans as on March 31, 2021. Operational cost of a kiloliter of water is Rs 36.58 crore, but recovery cost (excluding govt grants) is Rs 14.08 crore for CMWSSB.

The state finance minister on Monday disclosed that the state transport undertakings (STUs) were making a loss of Rs 59.15 per kilometer operated in the state. Disclosing that cost per km works out to Rs 96.75 per km, but revenue recovery was only Rs 37.60 per km, Thiaga Rajan said that a portion of loss was being compensated y way of diesel and studnet subsidy by the govt. Remarking that frequent revisions in diesel prices without a concomitant increase in fare has added to the growing deficit of STUs, he said that high employee and pension cost compared to the previous decade was also an important factor for financial misery of STUs.

Quality of service and fleet strength has deteriorated over a period of years. Fleet strength of 2011-12 was 21,197. Instead of increasing it to meet the growing population needs, it has actually reduced to 20,670 in 2020-21 as a result of inability of STUs to invest in capital assets, the minister said, accusing the STUs of not rationalizing routes and operating buses on uneconomic routes and ceding profitable routes to private operators.