Reliance SOS on Delhi discoms' finances

Burgeoning power purchase cost, coupled with stagnant retail rates, have led to an acute financial crisis within BSES, the Reliance Infrastructure-owned power distributor in Delhi. The company saw its debt liability jump 41 per cent to Rs 6,461 crore in 2010-11 and has now said, nine years after taking charge of two-thirds of the city’s loss-ridden power distribution circles, that it needs help urgently.

“We are going through an unprecedented liquidity crunch. Our capital expenditure has become nil. No investment is going in technology. Currently, we are struggling to even stay afloat,” Chief Executive Officer Lalit Jalan said in a briefing.

Two Reliance subsidiaries – BSES Rajdhani Power Ltd (BRPL) and BSES Yamuna Power Ltd (BYPL) — distribute around 11,000 million units of power annually in the capital, along with Tata-owned New Delhi Power Ltd (NDPL). While BRPL’s debt liability increased 37 per cent from Rs 2,939 crore in 2009-10 to Rs 4,040 crore in 2010-11, BYPL had overall debt of Rs 2,421 crore on its books in 2010-11, an increase of 48 per cent over the previous year.

Jalan attributed the “bleeding” financial situation of the company to a sharp 200 per cent jump in power purchase cost, which has increased from Rs 1.42 per unit in 2002, when the city’s distribution was handed over, to Rs 4.2 currently.

“Unfortunately, the over 32 per cent reduction in aggregate technical & vommercial losses brought about by us in the past eight years is offset by the mammoth spurt in purchase cost.

On the other hand, there has been zero change in retail tariffs in the last six years,” Jalan said.