Sustainable and financially viable business model for Tamil Nadu generation and Distribution co. ltd: The future power distribution sector reform for Tamil Nadu

Indian power sector witnessed several reforms since 1991 and serious of reforms after the enactment of ‘The Electricity Act, 2003’. Although these reforms have brought significant development in the power sector, it has failed to achieve the financial viability of the state-run power distribution companies (DISCOMs), and it remains a substantial threat to the energy security and economic growth of India. Tamil Nadu Generation and Distribution Company Ltd (TANGEDCO), a state-owned power utility of Tamil Nadu is incurring sustained financial losses. TANGEDCO in FY 2018-19 incurred a loss of Rs.17,962 crore, and it loses Rs.1.82 on every unit of energy sold. TANGEDCO’s distribution business become financially and commercially unviable and unsustainable. This study aimed at redesigning a financially viable and sustainable business model for TANGEDCO by diagnosing the factors significantly contributing to its sustained financial losses. This study developed a theoretical model to analyze the determinants, contributing to the sustained business losses of TANGEDCO. Partial Least Square Structural Equation Modelling was used to test the hypothesized relationships, and theoretical model developed. The study finds that 56 complex factors (comprising internal and external factors) and 17 latent variables are contributing to the sustained financial losses of TANGEDCO, which forms a complex model having 16 interlinked formative constructs. Based on the diagnostic study, a financially viable business model for TANGEDCO suggested with the needed reforms in the distribution sector to enhance the financial solvency of TANGEDCO.