In a significant move to unravel the financial distress of Tamil Nadu's power distributor, the state's electricity regulator has initiated a stringent audit of the Tamil Nadu Power Distribution Corporation Ltd (TNPDCL). The corporation is burdened with a staggering debt of ₹60,000 crore.
Supreme Court Directive Triggers Deep Dive Audit
The audit action follows a directive from the Supreme Court of India, which last year ordered all power distribution companies (discoms) to settle their debts. The court initially set a four-year deadline, later extending it to seven years, and mandated state regulatory bodies to appoint auditors for intensive financial scrutiny. Complying with this order, the Tamil Nadu Electricity Regulatory Commission (TNERC) has invited applications from eligible auditing firms.
According to officials, the commission has extended the last date for submitting bids to January 7, following requests from potential bidders. "After due scrutiny, the eligible auditing firm will be awarded the work order," a TNERC official stated.
Scope of the Forensic Financial Examination
The selected auditing firm, which must be empanelled with the Comptroller and Auditor General of India (CAG) or have chartered accountants experienced in auditing power utilities, has a critical mandate. The firm is tasked with conducting a strict and intensive audit of the circumstances that led to TNPDCL's poor financial health.
The auditors will specifically investigate why TNPDCL and its predecessor, the erstwhile Tangedco, failed to recover their debts and will identify old debts that remain outstanding. A crucial part of the probe will be to trace the source of funding that allowed TNPDCL to continue operations without resolving its massive debt issues. The firm must submit its findings in an interim report and a final report within 60 days from the date of assignment.
Historical Context of a Debt Legacy
The current crisis has deep roots. Before its restructuring, Tangedco was reeling under an enormous debt of ₹1.5 lakh crore until the 2021-22 financial year. To manage the situation, the state government had announced it would absorb the power utility's revenue shortfall to keep debts under control.
The entity was later trifurcated into three companies: TNPDCL (distribution), TNGECL (generation), and TNPGCL (power generation). As part of this split, a debt portion of ₹60,000 crore was allotted to TNPDCL, which is now the focus of the forensic audit. The final audit report, to be submitted in four copies as per the Supreme Court's directions, is expected to provide a clear roadmap for addressing the discom's financial woes and ensuring accountability.
