CAG audit flags TNPDCL's deepening reliance on Tamil Nadu government subsidies

Tamil Nadu's power distribution utility remains heavily dependent on the State government for financial support, with the latest State Finances Audit Report throwing fresh light on the scale of the transfers.

According to the Comptroller and Auditor-General of India's audit of Tamil Nadu's finances, the Tamil Nadu Power Distribution Corporation Limited (TNPDCL) has received ₹2.55 lakh crore in government assistance — comprising tariff subsidy and grants — over the 14 years since 2013-14.

Comparing the final figures for 2024-25 with those for 2013-14, the growth works out to 451%. Only revised estimates are available for 2025-26 and 2026-27. On average, the annual support amounts to about ₹18,130 crore.

The assistance crossed the five-digit mark in 2016-17, the year a scheme offering up to 100 units of free electricity to domestic consumers was introduced. Five years later, the government was mandated to absorb the discom's losses in full — a change that followed the utility being sanctioned roughly ₹30,230 crore in 2020 under the Centre's COVID-19 liquidity infusion scheme.

That arrangement has left the State's finances exposed. Because liberal government support has narrowed the gap between the average cost of supply and the average revenue realised — a gap that is expected to turn positive this year — the discom may receive less by way of grants than in the past five years. Even so, ₹5,000 crore has been earmarked for grants in the current year, over and above the tariff subsidy.

Of the subsidy of about ₹18,860 crore this year, nearly ₹9,893 crore — 53% — is set aside for domestic consumers, who receive free electricity of up to 200 units, provided their overall consumption does not exceed 500 units bi-monthly.

A further burden stems from the Supreme Court's direction last year on recovering regulatory assets, which are akin to deferred income. The ruling requires the government to pay ₹11,800 crore a year as grants for five years, from 2026-27 to 2030-31, adding up to ₹59,000 crore for the discom. Alternatively, the amount can be recovered through higher consumption charges, since regulatory assets represent past losses that can be recouped from consumers in future, subject to the regulator's approval.

The Tamilaga Vettri Kazhagam-led government has ruled out an upward revision of power tariffs, which would leave the State government to absorb the additional strain.