Tamil Nadu’s state government plans to recapitalize Tamil Nadu Electricity Board (TNEB) with measures that include raising $1.3bn through bonds and bulk advance subsidies for the domestic sector.

The state government has proposed raising bonds with the help of Tamil Nadu Power Finance Corporation (TNPFC), which has a better financial standing than the loss-laden TNEB.

Tamil Nadu has had a power deficit since 2008. Its current generation totals about 7 GW, while demand runs at about 11-12 GW. About 2 GW is purchased from other Indian states, but the cost of this has strained TNEB’s finances.

TNEB’s outstanding debt of $9bn is reflected in a poor credit rating that makes it difficult for the organization to raise money through bonds.

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