TNEB borrowed Rs 9,600 crore from banks in eight months

C Shivakumar

Chennai:

Tamil Nadu Electricity Board borrowed Rs 9,600 crore as loans, including short and mid-term, from various banks in a period of eight months from April 2010 to December 2010, which is nearly Rs 1,500 crore more than what it borrowed the pervious financial year, according to information available through RTI.



The RTI filed by one V Anbazhagan states that the TNEB borrowings from banks rose to more than 8,000 crore in the last four years bringing to fore the financial mess the department is in.



TNEB sources said the borrowing grew because of a spurt in demand for power besides opening up of new industries. There was also 24-hour non-stop power supply to the industries during the period besides the rise in middle class income which increased the consumption rate, he added.



Interestingly, the RTI states that borrowings during the period 2007-08 was Rs 1,750 crore and it rose to Rs 2,650 crore in 2008-09 financial year. It further rose to Rs 8,170 crore in 2009-10. What is more surprising is that the debts rose to Rs 9,600 crore in eight months from the period April 2010 to December 2010, the RTI stated. Surprisingly, there was no cash loss during 2006-07.



TNEB borrowed money in 57 instances from various banks in eight months ending December 2010 at various rate of interests from as low as 8.25 per cent to 11 per cent.



The borrowing at higher rate of interest was in 2008-09 when it borrowed Rs 50 crore as a medium term loan at a interest of 15.25 per cent from Federal Bank followed by a medium term loan of Rs 100 crore at 14 per cent interest from Canara Bank.



The documents reveal that while the medium term loans was more than the short term loan during the period 2007-08 and 2008-09, it became vice-versa from the period 2009-10 and 2010-11.



In 2007-08, the medium term loan was 1,350 crore while the short term loan was Rs 400 crore. Similarly in 2008-09, the medium term loan was 2,350 crore and short term Rs 300 crore.



But in 2009-10, the medium term loan was 2,595 crore while the short term loan was 5,575 crore, and in the eight months of the financial year 2010-11, the medium term loan was Rs 3,500 crore while the short term loan was Rs 6,140 crore.



TNEB sources said the department focused on short term loans during the period 2009-10 as the long term rates were on the higher end during the period 2008-09 and banks were reluctant to lend on long term. “We also had a two per cent advantage and saved nearly Rs 50 crore as interest,” the source said.



The huge debt was also due to the power crunch as no new projects came up since 1995 while the consumption rose enormously due to rise in population and industries, the source added