Over 1.5 crore families in Tamil Nadu have got a partial relief from the hike in power charges announced on March 30.
The Chief Minister, Ms J. Jayalalithaa, announced in the Assembly that the Government would give the Tamil Nadu Electricity Board an additional Rs 740-crore subsidy to compensate it for reducing the power charges for domestic consumers.
In the concession announced in the Assembly today, she said residents using up to 100 units of electricity in a two-month billing cycle will pay at the rate of Re 1 a unit instead of Rs 1.10 fixed earlier; those using 200 units will pay at the rate Rs 1.50 instead of Rs 1.80; and consumers using up to 500 units will pay Rs 2 a unit for the first 200 units, instead of Rs 3; and Rs 3 a unit for the balance instead of Rs 3.50.
This takes the total subsidy the Government pays the TNEB to Rs 4,294.16 crore for supplying free power to some segments of consumers including farmers and for supplying power at less than its generation cost.
The Tamil Nadu Electricity Regulatory Commission, an independent government body that oversees the working of the electricity utility, had hiked the power charges for all the consumers, domestic and industrial. This followed an application by the power utility last November to revise the power charges to compensate for its losses.
The State Electricity Board is facing a shortfall of Rs 9,741 crore a year between the generation cost and its income from sale of power to consumers.
Debt trap
The Chief Minister said the SEB was on the verge of falling into a debt trap. Between 2006 and 2011, the board lost about Rs 8,000 crore a year because it could not make its ends meet.
As of March 2012, its accumulated losses were Rs 50,000 crore, it owed banks and other lenders Rs 45,000 crore and had fallen back on payments of Rs 11,000 crore to suppliers and private power companies.
The power utility’s credit rating has suffered and could not borrow from the market. The Reserve Bank of India has instructed banks not to lend to the TNEB, she said.
Govt support
The State Government’s financial support to the electricity board is also on the increase.
In 2011-12, the Government support to the board was an unprecedented Rs 7,913.45 crore including a subsidy of Rs 2,058.19 crore, equity investment of Rs 4,100 crore for new power projects and ways and means advance of Rs 1,455.16 crore.
The hike in power charges announced by the regulator will add over Rs 7,874 crore to TNEB’s income. But a portion of this hike will be absorbed by the State Government which had earlier announced a subsidy of Rs 1,118.44 crore, the Chief Minister said.
The Tamil Nadu Government was fully absorbing the cost of supplying free power to 14 lakh poor consumers living in huts and the cost of free power to farmers.
Domestic consumers using up to 500 units of electricity in a two-month period also get subsidised power. Even if now specific subsidy has been announced for those using more than 500 units, they pay less than the cost to generate power, she said.