Telangana sets up Rythu Discom, liabilities of Rs 71,964 crore shifted

The Telangana government has created a third power distribution company, Telangana Rythu Power Distribution Company Limited, to handle electricity supply for agriculture and water schemes. The move involves shifting liabilities of nearly ₹72,000 crore and has sparked concerns over the future of free power to farmers

Hyderabad: The Telangana government has issued orders establishing a third power distribution company, Telangana Rythu Power Distribution Company Limited (TGRPDCL), bringing agricultural and bulk water supply power connections under a separate entity. The new Discom will handle power supply to agriculture, lift irrigation schemes, Mission Bhagiratha, Hyderabad Metro Water Board and other government water connections.

Meanwhile, the creation of the new Discom has triggered fears of the State government scrapping the free power scheme to the agriculture sector, if not immediately, in a phased manner. While the previous BRS government resisted the Centre’s diktat to instal meters to agricultural connections to avail additional loans amounting to 0.5 per cent of GSDP, the Congress government has already given its consent and raised loans.

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To shift the loans to the new Discom, the government must list out its revenue sources. Experts pointed out that as agricultural and water supply power connections are primary to this Discom, the possibility of scrapping free power supply and increased tariff cannot be ruled out. The new company will handle over 29.08 lakh power connections, mostly agricultural (29.05 lakh). Other connections include lift irrigation schemes, Hyderabad Metropolitan Water Supply & Sewerage Board (HMWS&SB), Mission Bhagiratha and special water connections.

While officials claimed that the third Discom would ensure more efficient management of electricity supply to the agricultural sector, sources said the move was mainly aimed to help improve the balance sheets of the existing Discoms, enabling them to restructure existing loans and raise fresh loans from financial institutions. Official sources said the move would enable the State government to deal with power connections for agriculture, irrigation and drinking water separately, enabling it to increase tariff, if needed.

The order for the new Discom was issued by Special Chief Secretary for Energy Naveen Mittal on Wednesday. Accordingly, the office of the new company will function from the TGSPDCL premises at Mint Compound. IAS officer Musharraf Faruqui has been appointed Chairman and Managing Director (CMD), while P Krishna Reddy, V Tirupati Reddy, V Mohan Rao and N Narasimhulu were named as board directors. Some of them will continue on the existing TGNPDCL and TGSPDCL boards.

According to the order, large liabilities of the existing Discoms have been transferred to the new entity. Official indicated that loans, arrears and dues amounting to about Rs 71,964 crore have been shifted to the Rythu Discom. This includes Rs 35,982 crore of government department dues, Rs 26,950 crore of power purchase liabilities and another Rs 9,032 crore of outstanding loans, inherited from the existing Discoms. Officials said this was probably the first Discom to have been formed with such large liabilities.