 "BSES discoms face summer heat from lenders")
Banks are asking for cost-reflective tariffs to put an end to the yearly build-up of arrears by the end of the current fiscal and a clear road map for recovery of over Rs 22,000 crore of Regulatory Assets (RAs).
The banks are irked at the unkept promise of liquidation of RAs — recognised but unrecovered revenue — by 2014-15, committed by the Delhi Electricity Regulatory Commission (DERC) to BSES discoms in 2011. It was also assumed that there would be no further building of arrears after 2012-13 as retail tariffs would be raised to the level of cost of supply. None of that has happened. “This has resulted in continued deterioration of the financial position of the company as also adversely affecting its ability to meet debt obligations to the lenders, and this is a matter of serious concern for us,” IDBI Bank, part of the consortium of lenders, has told BSES firms.
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BSES Rajdhani (BRPL) and BSES Yamuna (BYPL) are currently engaged in negotiations with lenders for loans to pay Rs 700 crore of dues to National Thermal Power Corporation (NTPC) Ltd by May 31, as ordered by the Supreme Court. The lenders had sanctioned long-term loans of Rs 1,478 crore to BYPL and Rs 1,929 crore to BRPL during financial year 2011-12 and 2012-13 to finance the cash flow mismatch faced by the two discoms due to accumulation of RAs. The deals were backed by DERC’s commitment.
Business Standard reviewed the DERC letter of December 2, 2011. The regulator had referred to the tariff order for 2011-12 saying, “The commission shall endeavour to cover the revenue gap approved till 2009-10 and the unrecovered gap for 2011-12 in the forthcoming multi-year tariff period 2012-15.” However, the RAs continued to accumulate and rose to Rs 2,855 crore up to financial year 2011-12 and an additional Rs 1,299 crore next year for BYPL.
BRPL’s case is worse — its RAs touched Rs 5,206 crore up to 2011-12 and an additional Rs 1,167 crore during 2012-13. To make matters worse, the minimum eight per cent surcharge over the base tariff in effect since July 2012 is not sufficient to recover even the carrying cost of the accumulated RAs.
DERC does not agree with this analysis and maintains it is premature to say that RAs have been increasing. “There has been no addition to RAs according to the last tariff orders for 2012-13 and 2013-14. The exercise for true-up of 2012-13 is on. The actual position based on audited accounts will be clear only in the new tariff order we issue in a month,” DERC Chairman P D Sudhakar told Business Standard. He added the matter was sub-judice and the stakeholders must wait for the court’s view.
Meanwhile, an official said BSES firms were busy discussing fresh loan proposals with the lenders to avert the payment crisis. If unpaid, NTPC might pull the plug on 2,000 Mw power it supplies to BSES firms that supply power to nearly 72 per cent of the city’s 3.4 million consumers.
In a relief to lenders, DERC has already firmed up a plan for liquidation of Rs 8,000 crore of RAs over eight years. Banks, however, are asking for squeezing this time frame by raising tariffs higher.
CURRENT AFFAIR
* BSES Rajdhani (BRPL) and BSES Yamuna (BYPL) are engaged in negotiations with lenders for loans to pay Rs 700 crore of dues to NTPC by May 31 as ordered by the Supreme Court
* Lenders had sanctioned long-term loans of Rs 1,478 crore to BYPL and Rs 1,929 crore to BRPL during financial year 2011-12 and 2012-13 to finance the cash flow mismatch faced by them due to accumulation of Regulatory Assets (RA)
* The RAs continued to accumulate and rose to Rs 2,855 crore up to financial year 2011-12 and an additional Rs 1,299 crore next year for BYPL
* For BRPL, RAs touched Rs 5,206 crore up to 2011-12 and an additional Rs 1,167 crore during 2012-13