Reeling under severe power crunch, the Tamil Nadu government has made it compulsory for all industries in the state to take a one-day power holiday from this Thursday.

Besides, a 40% power cut would be imposed to all industrial and commercial consumers which will work out as a four-hour power restriction schedule during peak hours from 6 pm to 10 pm.

The sweeping cuts that can cripple industrial growth in the state have become necessary as the state has run out of options to subsidise power. But while it has also announced emergency measures to buy power, the state is silent on how the Kudankulam nuclear power plant, if made operational, can add 1,000 MW to the grid in the next few months.

The state government has tacitly sided with the opponents of the plant and taken little steps to defuse the tension around its commissioning.

Tamil Nadu is one of India?s top industrialised states but it has not revised electricity tariffs for the past five years. Tariffs in the state, especially for domestic consumer, are the lowest at an average of R3.81 a unit against a production cost of R5.31. The Jayalalithaa-led government which took over in June has blamed the previous DMK government for the mess but taken no step so far to correct the situation. The public sector generation and distribution company (TANGEDCO) has filed a tariff revision plan with the state electricity regulatory commission in November, which is still pending three months later.

The power cuts from March 1 will be executed in a staggered manner. All the industries will have to face one full power-less day in a week, through Monday to Saturday. But industry has welcomed the order as it ensures predictability in their schedule instead of erratic cuts.

The Tamil Nadu State Council of the Confederation of Indian Industry has welcomed the state government decision. In a statement it said with the current decision, unscheduled power cuts could be avoided especially for process industries (like automobiles) where unscheduled power cuts would disrupt production and result in major losses, it said in a statement. The state is India?s auto hub.

There will be two-hour power cuts in Chennai and four hours load shedding in the rest of the state from Monday, TANGEDCO said in a statement. The state has a peak demand of 12,500 MW daily but is able to provide only about 8,500 MW.

To tide over the present crisis, the state will buy 900 MW from other states for the next five years. In addition, to manage the deficit projected during the years 2012-13 to 2015-16, it has also proposed to purchase 1000 MW during the said period, an additional 1000 MW for 3 years starting from 2013-14 and another 1000 MW for 2 years starting from 2014-15.

The Jayalalithaa government has come out with the new power regulation on the backdrop of widespread protests against the unscheduled load shedding for long duration ranging from six to eight hours. Noting that the deficit situation was likely to last for a few months, the TANGEDCO statement said from June with wind generation picking up and power projects becoming functional one after other, it will be possible to relax some of the restrictions.

The state government has also fast tracked the capacity addition plan by TANGEDCO. It has drawn up a plan to augment generation capacity by 16, 875 MW in next 10 years. Out of it 9772 MW will be from state sector, 3028 MW as share from joint venture projects, 6,080 MW as share from central sector projects / ultra-mega power projects and 4075 MW from independent power producers.

In a bid to add immediate power to its starving grid, Tamil Nadu Electricity Board has decided to implement the R8,000 crore, 1600 MW, Udangudi Power Project in Tamil Nadu on its own, scrapping its joint venture with BHEL for the purpose. The state has decided to execute the project on its own and asked the Centre to provide mega power project status to in order to get a slew of incentives.