The Tamil Nadu Government has announced a package of financial assistance to the Tamil Nadu Electricity Board including an advance of Rs 1,000 crore.

The other support measures include providing a guarantee to enable the Board avail itself of a loan of Rs 5,000 crore each from the Power Finance Corporation and the Rural Electrification Corporation; and accepting to repay 50 per cent, about Rs 9,529 crore, of the short term and medium term loans of the utility. This is in line with the financial restructuring plan recommended by the Chaturvedi Committee and the discussions between the Board and the officials of the Finance and Power Departments of the Government of India.

In the current financial year, the State Government will also compensate the utility 30 per cent of the revenue shortfall, about Rs 1,294 crore.

The State Government has passed orders to implement this support package, according to an official press release. These measures will pave the way to improve the financial condition of the Board.

At the beginning of the current financial year the utility’s accumulated losses were Rs 54,500 crore and it owed banks and financial institutions Rs 46,500 crore.

In addition, dues to power producers and suppliers were Rs 11,000 crore. The Board was in a debt trap as it had to borrow to service the loans, the release said.

In the current financial year, the State Government has granted a subsidy of Rs 3,020 crore to the Board and an equity assistance of Rs 1,500 crore to invest in new power projects.

In the 2011-12 the subsidy, advance and equity funding by the State Government to the Board totalled Rs 7,913.45 crore, the release said.

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