The Hindu : Tamil Nadu News : Power purchase becoming burden on TNEB’s finances

Online edition of India's National Newspaper
Saturday, Aug 16, 2008
ePaper | Mobile/PDA Version

Tamil Nadu

Tamil Nadu

Power purchase becoming burden on TNEB’s finances

T. Ramakrishnan

Forced to buy power at high cost to meet subscribers’ needs

CHENNAI: Power purchase is fast becoming the principal burden on finances of the Tamil Nadu Electricity Board (TNEB).

In four years, the purchase cost has doubled. Faced with the growing demand, the TNEB is forced to buy at a high cost to meet the requirements of the State even if this does not satisfy all segments of subscribers.

At present, the TNEB purchases power essentially from three sources – Central generating stations, independent power producers (IPPs) and traders. It relies on private wind mills and co-generation plants for meeting a portion of the demand.

A senior Board official says it is purchasing power at rates considered high until a few years ago.

Citing the example of power from plants in Kayamkulam (Kerala), Pillaiperumalnallur, Samalpatti and Samayanallur, the official says the average unit cost of power from these plants come to Rs.7.91, Rs.7.70, Rs.7.62 and Rs.7.65 respectively. Except the Kayamkulam plant, which is run by the NTPC, the others are operated by IPPs. The official points out that since naphtha is used as the main fuel in Kayamkulam and Pillaiperumalnallur, the unit cost comes to about Rs.12.

With regard to wind mills, the Board works out the weighted average cost as Rs.3.25 per unit. In respect of cogeneration, it estimates the cost at Rs.3.09 a unit. Power from captive generation sets is calculated at Rs.3.01 per unit.

The official explains that those who run wind mills, cogeneration plant and captive sets are also permitted to adjust the quantum of power sold to the TNEB against their energy consumption on the basis of high tension tariff.

The average cost of power purchased from all the sources comes to Rs.3.61 per unit. The cost of power generated by the TNEB’s stations is Rs.1.95 per unit. After taking into account various factors including line losses, the weighted average cost of power supplied by the Board is Rs.4.25 per unit.

With the freeze on increase in tariff, the growing burden of power purchase is threatening to erode the revenue base. According to Board projections, while the cost of power purchase is Rs.14,690.62 crore, the utility is like to net Rs.16,958.16 crore through power sold to its consumers. It will also receive Rs.1,624.9 crore in the form of tariff subsidy from the government.

With nearly 80 per cent of the revenue through sale being consumed by the cost of power purchase, the Board has to meet the costs of fuel, operation and maintenance, establishment with the remaining revenue.

One saving grace is that the increase in fuel cost is not as high as in the case of power purchase, despite rising prices of various inputs. In 2003-04, the fuel cost was Rs.2,869.96 crore. This year, it is estimated at Rs.4,123.88 crore, the official adds.

Printer friendly page
Send this article to Friends by E-Mail

Tamil Nadu