The Tamil Nadu state budget was tabled today and there is some good news for the debt ridden state electricity board (SEB). The government has said that the power situation in Tamil Nadu is set to improve and the SEB will turn around in 3-4 years. CNBC-TV18's Swathi Narayanan reports.
Tamil Nadu is currently facing a shortage of about 4,000 MW of power. The government has said that Rs 21,000 crore worth of power projects will be commissioned this year and 3,230 MW will be added by March 2014.
As far as improving the financial condition of the debt-ridden Tamil Nadu Electricity Board (TNEB) is concerned, the government has taken some firm steps. The have said that 50 percent of the short-term loans will be taken up by the government itself.
As of now, the short-term loans of TNEB stand at around Rs 12,213 crore. The total debt of TNEB is about Rs 45,000 crore. The government said they will give about Rs 11,242 crore to the electricity board this year and have also given guarantees to raise about Rs 10,000 crore from Rural Electrification Corporation ( REC ) and Power Finance Corporation ( PFC ).
The news is good for banks like Indian Overseas Bank ( IOB ) that has an exposure of Rs 1,780 crore to the TNEB. REC, which has an exposure of Rs 300 crore and Punjab National Bank ( PNB), which has an exposure of Rs 1,750 crore.