BSES discoms likely to get PFC bailout

The two discoms of Anil Ambani-controlled Reliance Infrastructure supply power to 70% of the city's 3.2 mn consumers

Power Finance Corporation (PFC), the state-owned electricity-sector lender, is likely to bail Reliance Infrastructure's Delhi power distribution companies (discoms) out of a payment crisis that is threatening to pull the plug on power supply in the national capital.

According to a source, the two discoms - BSES Yamuna Pvt Ltd (BYPL) and BSES Rajdhani Pvt Ltd (BRPL) - which need to clear dues of Rs 700 crore for power bought from NTPC, had approached PFC for a Rs 500-crore loan and a Rs 10,000-crore long-term debt. The power financier had asked for a "comfort letter" from the Delhi Electricity Regulatory Commission (DERC) before extending the assistance.

"We have given the comfort letter to PFC saying the regulatory assets (RAs) of the BSES discoms are recognised in the tariff orders. We have also said there is a concrete plan for liquidation of Rs 11,431 crore of past arrears as on March 2012," DERC Chairman P D Sudhakar told Business Standard.

Confirming a request for loan had been received from BSES discoms, a senior PFC executive said the company's board would take a call at its meeting on May 27.

The two discoms of Anil Ambani-controlled Reliance Infrastructure supply power to 70 per cent of the city's 3.2 million consumers. They operate on a cost-plus-return basis, with profits regulated by DERC. In case the costs exceed revenue, the resultant gap is recoverable through an increase in tariff. This gap is recognised as RA in the books and is a non-cash asset.

Thanks to a rapid rise in cost of supply and stagnant tariffs, Delhi discoms RAs have jumped sharply  from Rs 936 crore in 2008-09 to Rs 19,500 crore in 2012-13.     

DERC had in March decided to allow recovery of past dues totalling Rs 8,000 crore over eight years beginning 2014-15. The plan allows the discoms to recover Rs 1,671 crore from consumers through tariff beginning the current financial year.

Hearing a petition from NTPC, the Supreme Court had on May 6 directed the BSES firms to clear their Rs 700-crore dues by May 31. The firms had approached PFC, Rural Electrification Corp (REC), State Bank of India (SBI) and IDBI Bank for loans. While IDBI and SBI had refused, PFC and REC are currently looking at the discoms request for loans of Rs 500 crore each.

NTPC Chairman Arup Roy Choudhury had last week reaffirmed the companys resolve to cut 2,000 Mw of power supply to BSES discoms if the payments were not made by May 31.

POWER STRUGGLE

* SC earlier this month ordered BSES firms to clear by May 31 its Rs 700-cr dues for power bought from NTPC

* The BSES discoms had approached PFC for a Rs 500-crore loan and a Rs 10,000-crore long-term debt

* According to a senior PFC executive, the company's board will take a call on extending the loan at its meeting on May 27

* The two discoms supply power to 70% of Delhi's 3.2 million consumers