Kolkata-based firm to provide electricity to units in the Nanguneri SEZ

Breaking new ground in power distribution, Tamil Nadu will soon have a private licensee for the distribution of electricity.

The State Electricity Regulatory Commission (TNERC) has permitted the India Power Corporation (Tuticorin) Private Limited (IPCTPL), a Kolkata-based company, to provide electricity to units in the multi-product special economic zone (SEZ) at Nanguneri in Tirunelveli district.

The term of the licence would be 25 years with retrospective effect from January 19, 2017, the date on which the IPCTPL was recognised by the Central government’s Commerce department as co-developer. This means that the licence will be in force till January 18, 2042.

As of now, the Tamil Nadu Generation and Distribution Corporation (Tangedco) is the sole distribution licensee in the State. It is supplying electricity to 38 operational SEZs, which are engaged in exports. According to officials of the State Industries Department, a little over dozen units are functioning in the Nanguneri SEZ.

The development assumes relevance against the backdrop of the position of the successive State governments, be under the DMK or the AIADMK, that electricity distribution would not be privatised. Sections of power industry had made unsuccessful attempts to make the government agree to privatisation of distribution network in cities, including Chennai.

10-year-old idea

A major reason cited by the authorities has been that the Tangedco has been providing subsidy to a large number of consumers, including domestic category out of its “social commitments,” which it can ill afford to abandon.

The State government has not been receptive even to the idea of allowing franchisees in distribution, though the Centre has been pushing the idea for over 10 years. Till about 20 years ago, there were rural electricity cooperative societies in places such as Thirumayam and Kumbakonam, which had functioned as franchisees. But, later, the government decided to merge them with the Tamil Nadu Electricity Board, a precursor to the Tangedco.

The TNERC’s order came around one and a half years after the IPCTPL approached the Commission in March 2017. The firm’s contention was that being co-developer of the SEZ, it had the mandate, as obtained from the Centre, to distribute quality and uninterrupted power, development of power distribution network and other ancillary support relating to power distribution within [the] SEZ.” Quoting provisions of the Electricity Act of 2003 and the SEZ Act of 2005, the firm had submitted that as the co-developer, it should be deemed to be a licensee in electricity distribution.

Clarifying that the Commission has not conferred licence on the firm on its own, a senior TNERC official said, “What we have done is to take cognisance of the legal status of the IPCTPL, as recognised by the Central government.” Once the firm finalises its arrangements for sourcing electricity and identifying prospective consumers, it has to approach the TNERC for approval of the terms of power sale.

When asked how Tangedco viewed the TNERC’s directive, a top Corporation official said, “We are examining the order to understand its implications and see our options.”