Tamil Nadu white paper: Rs 2.47 lakh crore debt, tariff freeze and 231 new substations planned

The Tamil Nadu government has ruled out passing on this year’s electricity tariff revision to consumers, even as a White Paper tabled by Electricity Minister R. Nirmalkumar revealed that the cumulative debt of the state’s four power corporations has reached Rs 2.47 lakh crore.

Presenting the White Paper at the Electricity Board headquarters, the Minister said consumers would not bear the 3.57% annual tariff revision this year. He described the document as an assessment of the financial position of the power sector and a roadmap for future reforms.

Debt and financial position

The White Paper traces the financial performance of the erstwhile Tamil Nadu Electricity Board (TNEB) over the past 25 years. It states that the combined outstanding debt of the state’s four power corporations stands at Rs 2,47,130 crore, accounting for 77.6% of the total debt of Tamil Nadu’s public sector undertakings.

The document also outlines the sector’s financial deficits over successive administrations. The deficit stood at Rs 35,463 crore during 2006-2011, Rs 56,361 crore during 2011-2016 and Rs 58,534 crore during 2016-2021. Between 2021 and 2026, TNEB recorded expenditure of Rs 5.32 lakh crore against revenue of Rs 4.97 lakh crore, resulting in a deficit of Rs 34,447 crore.

According to the Minister, the 2022 tariff revision implemented by the previous government did not improve the financial position of the electricity department, as a significant portion of the expenditure was incurred on power purchase agreements.

Generation and power procurement

Tamil Nadu recorded an all-time peak power demand of 21,307 MW in 2026. According to the White Paper, the state has only 3,495 MW of its own generation capacity, comprising 2,965 MW of thermal power, 381 MW of hydropower and 149 MW of gas-based generation.

The document states that dependence on external power procurement has increased due to limited investment in state-owned generation capacity. It notes that solar power has been procured at Rs 6.11 per unit, while electricity purchased through the power exchange has at times cost up to Rs 17 per unit during periods of peak demand.

The White Paper also reviews four major thermal power projects—Ennore SEZ (2×660 MW), Udangudi Stage-I (2×660 MW), ETPS Expansion (660 MW) and Uppur (2×800 MW). It states that only the Ennore SEZ and Udangudi projects are currently under implementation. According to the report, the ETPS Expansion and Uppur projects were discontinued after more than Rs 8,700 crore had been spent on them.

Transmission and distribution

The White Paper states that 359 substations of various capacities were commissioned between 2016 and 2021, compared with 122 substations between 2021 and 2026.

It also refers to an investigation into an alleged procurement scam involving 45,800 distribution transformers out of 99,573 transformers installed during the previous government’s tenure.

Reform measures

The government has proposed a Rs 49,532 crore programme to strengthen the power sector and improve its financial position.

The plan includes renovation of 682 substations at a cost of Rs 8,318 crore, completion of 121 substations currently under construction and development of 231 new substations. To reduce power procurement costs, the government plans to adopt long- and medium-term open access arrangements, which it estimates could generate monthly savings of around Rs 215 crore.

On smart metering, the Minister said the state is currently required to install smart meters only in government buildings. He added that no decision has been taken to roll out smart meters for residential consumers and that pilot projects will be undertaken before any wider implementation.

The government also confirmed that the free electricity scheme for farmers will continue and that no electricity tariff revision, including the 3.57% annual revision, will be implemented this year. The White Paper further highlighted a 45% manpower shortage in the electricity department. To address this, the government plans to recruit around 20,000 personnel this year and absorb 5,391 gangmen recruited in 2021 whose appointments had been kept in abeyance.

The featured photograph is for representation only.