Day after govt threat, double whammy for Delhi discoms

NTPC insists on payments, DERC preparing for inquiry

A day after the Delhi government pressed for cancellation of licences of Reliance Infrastructure-owned power distribution firms — BSES Yamuna Pvt Ltd (BYPL) and BSES Rajdhani Pct Ltd (BRPL) — pressure appeared to be mounting on the two discoms on Tuesday. While the Delhi Electricity Regulatory Commission (DERC) is preparing to consider the government’s request, NTPC Ltd is insisting on clearance of dues.

Also, Delhi Chief Minister Arvind Kejriwal wrote to Lieutenant-Governor Najeeb Jung suggesting the government might have to step in at some stage to take control of the “ugly situation”.

DERC Chairman P D Sudhakar told Business Standard the regulator would look into the Delhi government’s request for cancellation of licence. “But, we will conduct our own inquiry before that. The process of inquiry will be according to the Electricity Act,” he said.

IN THE MIDDLE OF A POWER PLAY

• DERC says preparing for an inquiry in BSES discom finances
• NTPC threatens to choke supply after February 11 if dues not cleared
• Power minister says dues to NTPC must be paid as soon as possible
• BSES slams the proposed cancellation as arbitrary and illegal; seeks govt support in resolving the present payment crisis

BSES responded by slamming the proposed cancellation of its licence as “arbitrary and illegal”. In a separate statement, a spokesperson for Reliance Infrastructure said: “The Delhi government can resolve the immediate payment crisis by providing support to the Delhi discoms to make payment to NTPC, against the security of huge past underrecoveries that have led to creation of regulatory assets (unpaid dues from consumers) of over Rs 15,000 crore.”

Under Section 19 (1) of the Electricity Act 2003, licence suspension and revocation is the exclusive domain of the regulator.

DERC can cancel the licence in “public interest”, if it is convinced the financial position of a licensee is such that it is unable to discharge duties. DERC will, however, have to issue a three-month showcause notice to the discom. According to the terms of the distribution licence, within a year of suspension, DERC will either revoke the suspension and restore the licence or revoke the licence according to the provisions of the Act.

The Kejriwal-led Delhi government has advised DERC to conduct an inquiry within two-three days so that administrative officers could be appointed for operations at the two discoms. The Act, however, has no provision defining a time limit for regulatory inquiry. Sudhakar added the government was trying to ensure power supply for consumers was not cut.

Power outages in the city, however, seemed unavoidable, as NTPC Chairman Arup Roy Choudhury on Tuesday said around 2,000 Mw of power supplied to BYPL and BRPL would have to be regulated if these discoms did not pay pending dues. NTPC had served a notice on BSES last Saturday to clear its dues. “We are in a difficult situation. If we are not paid in time, we will have to regulate nearly 2,000 Mw of power. We have buyers for it,” Choudhury said on the sidelines of a power sector event here.

Power Minister Jyotiraditya Scindia, also present on the occasion, said his ministry hoped payment dues would be paid as soon as possible. BSES firms supply power to over 75 per cent of the city’s 3.4 million consumers. The two discoms source as much as 60 per cent of their power requirement from NTPC.

According to the Power Purchase Agreement (PPA) between the two sides, BSES companies have to ensure a minimum quantum of letter of credit (LC), a payment-security mechanism. Since BYPL has not provided an LC of the requisite amount (creating a payment shortfall of Rs 96 crore), NTPC has said it will choke its power supply for 90 days beginning February 11.

If BSES companies fail to pay the LC and past dues during the notice period, NTPC will have the right to terminate the PPA after intimating the discoms in writing. The Central Electricity Regulatory Commission (regulator of power supply) regulations also provide for stopping supply in the absence of a payment-security mechanism.

BYPL had recently told the government power cuts of eight-10 hours was likely, as it lacked the resources to pay generation companies and banks had stopped credit flow due to accumulation of revenue gap (regulatory assets) of an estimated Rs 6,229 crore. There were no funds to pay aggregate dues of Rs 204 crore to NTPC and NHPC for power procured in January, it said.