Industry analysts recommend that the State government extend equity support to Tamil Nadu Green Energy Corporation Ltd (TNGECL) to help it with equity or capital support to maintain a clean balance sheet. Such measures would significantly aid the company in capitalising on emerging opportunities in the green energy sector and achieving capacity targets.
Operations of Tangedco (Tamil Nadu Generation and Distribution Corporation Limited) were split into Tamil Nadu Power Generation Corporation Ltd (TNPGCL) for thermal power generation, and Tamil Nadu Power Distribution Corporation Ltd (TNPDCL) for distribution, with Tangedco being renamed as TNPDCL. Additionally, Tamil Nadu Green Energy Corporation Ltd was established by integrating Tangedco’s renewable wing and merging it with the Tamil Nadu Energy Development Agency (TEDA).
The incorporation of TNPGCL and TNGECL took place on February 9, 2024 and February 10, 2024 respectively.
Despite TNGECL’s provisional balance sheet showing a negative net worth, it carries a lesser burden of accumulated losses of Tangedco.
As per the provisional transfer scheme for assets, liabilities, and other obligations, TNGECL had a negative total equity of ₹1,172 crore as of April 1, 2024. However, TNGECL’s negative total equity is significantly lower than TNPGCL’s negative total equity of ₹59,620 crore and TNPDCL’s negative total equity of ₹81,023 crore.
However, starting a new company with a negative net worth is challenging. During the earlier restructuring when TNEB was split into Tangedco and Tantransco, asset revaluation resulted in a positive net worth. Currently, under IFRS, there is no revaluation concept, and only the current value of assets is reflected, said a top official of a consulting firm.
Opportunities in renewable energy sector
An analyst tracking the power sector emphasised that a clean balance sheet for TNGECL would attract funding and allow for raising capital at lower rates, given the vast opportunities in the renewable energy sector. The TN government should address this through equity infusion or capital from other sources.
TNGECL has been created to fast-track the energy transition from 22 per cent of the renewable energy mix to 50 per cent by 2030 to achieve the RPO trajectory, get green funds at lower cost and promote all forms of renewable energy sources and pumped storage projects, among others, according to the Energy Department’s policy note for 2024-25.
TNGECL will receive financial support through the Green Fund. In FY24, the TN government provided financial assistance of ₹29.31 crore in the form of equity share capital. The State Government has also provided a Government Guarantee for availing loan facility by the company from financial institutions/ banks, it said.
With the aim of operating as an independent entity, TNGECL will sell the electricity generated from each plant to the TNPDCL at the tariff rates (multi-year tariff order) notified by the regulator.