Financial condition of Telangana’s power sector is precarious, matter of grave concern | White Paper released

Hyderabad: Terming the financial health of Telangana power sector as precarious and a matter of grave concern, the State government released a white paper on power in the Assembly on Thursday.

The State government said the financial health of the power utilities is alarming with debts of Discoms being Rs 81,516 crore and accumulated loses of Discoms rising to Rs 62,461 crore as on October 31, 2023.

The White Paper said that the main reason why the Discoms were facing so many difficulties in electricity procurement was dues of Rs. 28,842 crore which have not been paid by various departments of the State government for years.

“Out of the total arrears, the arrears of the irrigation department alone are Rs. 14,193 crore. Apart from this, the burden of Rs. 14,928 crore which the previous government had promised to pay to the Discoms under the actual adjustment costs of power purchase (True up charges) further weakened the financial position of the Discoms,” it disclosed.

At the time of formation of the Telangana State the installed generation capacity of TSGENCO was 4365.26 MW. Prior to the formation of the State itself, generation projects have been conceived/ initiated with a capacity of 2,960 MW.

The commissioning of these projects after the formation of the State has been critical in providing reliable power supply.

“After formation of the state, only one power project of 1,080 MW capacity was conceived and commissioned at Bhadradri Thermal Power Stations (BTPS) with inordinate time and cost overrun using subcritical technology. Another power project of 4,000 MW in Nalgonda District (Yadadri Thermal Power Station) was taken up at a location far removed from the coal mines leading to avoidable coal transport costs of over Rs. 800 Cr/annum which is liable to further escalate with time and will be applicable over entire life time of the project,” the report pointed out.

The accumulated losses of Discoms as on 31.03.2023 stand at Rs. 62,461 Cr. Discoms have a debt of Rs. 81,516 Cr (as on 31.10.2023). Of this, an amount of Rs. 30,406 Cr has been borrowed as working capital primarily to pay power charges to the generators.

Despite this, an amount of Rs. 28,673 Cr of generation and transmission dues remain to be paid by Discoms, the White Paper said.

The difficulty faced by Discoms in paying power purchase bills has been aggravated by the default of Government in paying the power bills of its own departments which have now mounted to Rs. 28,842 Cr. Of this, the amount due from lift irrigation projects alone is Rs. 14,193 Cr. Government’s default in paying committed true up charges of Rs. 14,928 Cr has further contributed to the further deterioration of Discom finances.

The State government in its White Paper said that for merely to keep the power supply going, the Discoms are resorting to borrowings on a regular basis which have reached unsustainable proportions.

“There is very limited scope to continue to fund the purchase of power through these means. Discoms are now finding themselves in debt trap due to failure of government in paying its dues and commitments to the sector,” it said.

The State government said despite the above legacy of financial imprudence, it is committed to providing quality and reliable power to the people by overcoming the challenges faced by the sector with a responsible and transparent approach.