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Tamil Nadu owes wind energy farms Rs.12 billion in dues

There has been a lot of concern from the international lenders and multilateral agencies about the financial health of the state distribution companies and their ability to pay for the PPA’s.

Tamil Nadu has the largest installed capacity in wind with installed capacity upwards of about 5887MW of which about 997MW was installed in the year 2010-11. The overall installed capacity in the year 2010-11 was about 2300MW.

A couple of  weeks ago, the wind turbine manufacturers had announced of a plan to ask for an increase in tariff from the Tamil Nadu government, Panchabuta had mentioned that developers we spoke to have said that they would like a better payment schedule for their existing wind farms in Tamil Nadu. Most developers that we spoke to indicate that their typical payments are delayed by at least 4-6 months and that affects their projects significantly. It is in spite of these delays that projects continue to get installed in Tamil Nadu.

 IPP  developers that we spoke to indicate that if the payment was better and made as per the terms in the PPA and with  improvement in evacuation facilities, Tamil Nadu could continue to maintain its dominant position in wind installations. It is this position that has led to huge manufacturing bases and jobs in the state something that the decision makes need to consider. With some of the action shifting to Maharashtra and Gujarat in terms of installations, new manufacturing facilities are being located in those states.

According to reports, the Tamil Nadu Electricity Board (TNEB) has not paid for the power purchased from them in the last eight months. The arrears are now a whopping Rs 1200 crore.

Indian Wind Power Association (IWPA) chairman K Kasthurirangaian told TOI that the TNEB’s failure to release payments on time has created a crisis in the sector. Wind energy producing companies in the state are rethinking their investment in the sector, when world over the focus is on generating electricity from renewable sources of power like wind.

“The sector is in crisis due to delay in payments,” said Kasthurirangaian. “The TNEB cleared bills of wind energy producers only till July 2010. Then they stopped the disbursal,” he said. “Whenever we ask for payment, we are told that they don’t have enough funds to pay the arrears,” he added.

The crisis in power sector is the creation of successive governments, which did precious little to improve the power sector in the state in the last 10 years, he said. “As a result, the TNEB now has debt of Rs 17,000 crore,” he said.

The investment in the wind sector comes to nearly Rs 35,000 crore. “About Rs 10,000 crore of this investment is by farm owners. The rest they raised through bank loans. If the TNEB does not have the required funds to clear the arrears, the state government must pump money to clear our debt,” Kasthurirangaian said.

Wind power accounts for almost 15% of the electricity generated within Tamil Nadu, which is remarkably high for an Indian state. The installed capacity of windmills in the state was 5,887 MW as on March 31, 2011. Of this, 997 MW was added during 2010-2011. Investments to generate 1,000 MW more is expected to come in this year, according to Kasthurirangaian. New farms are expected in Theni, Tenkasi and Darapuram.

Developers that spoke to Panchabuta further add that while wind and other renewables are meted out with this treatment, almost all other IPP’s in the state that deliver conventional power have been paid on time because of the nature of their PPA and the guarentees given by TNEB.

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