Tamil Nadu - Chennai

Centre gives State two more months to reorganise TNEB

CHENNAI: The Central government has given two more months to the State Government for restructuring the Tamil Nadu Electricity Board (TNEB).

The current deadline, given with effect from June 10, expires on Thursday. The State had initially sought six months, but the Centre granted only two, according to an official source.

Under the Electricity Act, the TNEB or any SEB cannot perform all the functions of generation, transmission and distribution because the agency engaged in transmission is barred from trading in electricity.

With the State in the midst of an acute power crisis, the authorities would like to devote more attention to crisis management. However, the message from the Centre is that the State should focus on reforms too, the source says.

The Centre has called a meeting next month to discuss the subject.

Though the State has declared its intention of forming a separate organisation for transmission, there is a growing opinion among policymakers that at least one more organisation has to be created. This is how other States such as Gujarat and Maharashtra handled the issue of reorganisation of power utilities.

In Gujarat, the government enacted the Gujarat Electricity Industry (Reorganisation and Regulation) Act, 2003, which paved the way for dividing the Gujarat Electricity Board into four regional power generation companies, four regional distribution companies, one transmission company and one parent company.

In Maharashtra, under the provisions of the Electricity Act 2003, four entities — MSEB (Maharashtra State Electricity Board) Holding Company, Maharashtra State Generation Company, Maharashtra State Transmission Company and the Maharashtra State Distribution Company — were formed.

Till now, the administration in Tamil Nadu was toying with the idea of forming a power transmission company and allowing the TNEB to carry out its functions of generation and distribution. But, policy makers now see a hitch in the organisational character of the Electricity Board.

If the government sticks to this option, it has to approach the Central government regularly for permitting the TNEB to function as a licensee in distribution and trading of electricity.

As this will become cumbersome, the latest thinking is to go in for one more company that will handle generation and distribution or converting the TNEB as a holding company with exclusive entities for generation and distribution, the source says.

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