Delhi power crisis: The ball is in Kejriwal's court

It's in the interest of the aam aadmi that AAP ensures no power failure as it won't take them long to realise that costly power is better than no power

Arvind Kejriwal, chief minister of Delhi, promised a 50% power tariff cut but instead the people of Delhi are likely to face 50% power cut. While it would ultimately result in 50% lower power bill, the chief minister surely didn’t mean that. 

 

BSES Yamuna, the power distribution company of Anil Ambani-controlled Reliance Infrastructure, has sent an alert over its unviable financial situation which could lead to nearly 10 hours of power cut in eastern and central Delhi.  

 

Activist-turned-politician Arvind Kejriwal of the Aam Aadmi Party (AAP) had promised a 50% power tariff cut for Delhi in his election manifesto. Immediately after becoming chief minister he asked power companies to implement the cut and get their accounts audited. 
 

 

Kejriwal announced a subsidy package to the distribution company to compensate them for the loss. But as part of the package the government announced that it would only provide the subsidy amount to Tata Power and would adjust BSES's amount from the money it owes to the government. BSES is of the opinion that the law is clear in terms of subsidy announced by the government which says that the discom should be reimbursed the amount in advance and there can be no adjustments.

 

The chief minister and his party are of the opinion that power distribution companies were overcharging their customers and without getting into the facts of the case announced a tariff cut and subsequently asked the Comptroller and Auditor General (CAG) to audit the books of these companies. 

 

On the other hand the three power distribution companies operating in Delhi say that power tariff is announced by Delhi Electricity Regulatory Commission (DERC) which announces power tariff after getting the figures audited by government approved auditors and conducting special audits in between. They approached the Delhi High Court to prevent CAG from auditing their books. But this is expected to be a long drawn case as the court said that the matter needed a detailed hearing and fixed the next date of hearing in mid-March. 

 

While the case grinds its way through the High Court people of Delhi will suffer. Is there a solution to this stalemate? Let's look at the options in front of both the parties.  

 

BSES Yamuna says it is in no position to buy more power from the generating companies. Further, it says that banks are not willing to lend money and on the contrary have withdrawn funding support owing to accumulated revenue arrears of Rs 6,200 crore. BSES has further said that banks are 'alarmed' by Delhi government's subsidy led approach to tariffs, regardless of actual cost of power. 

 

BSES Yamuna issued the ultimatum after generating companies like state run Damodar Valley Corporation and SJVN reduced their power supply while government run NTPC and NHPC have threatened to cut supplies. 

 

Not finding funds from banks, BSES has sought government help to extend the credit payment for repayment within 90 days. It is still awaiting a response from the government. 

 

From BSES Yamuna's point of view, it seems to be running out of options, and the only way it will be able to continue power supply is if it gets more time to pay the generating companies. What is also clear is that the entire power sector seems to be against the ad-hoc decision of Delhi government. Kejriwal has even said that if necessary, the state government will bring other power companies to Delhi. "Companies run by Tata and Ambanis are not the only companies. We will bring other companies," he added.

 

The ball is clearly in Kejriwal's court but unfortunately it's a curveball. For Kejriwal and his party it would mean a loss of face to roll back the tariff cut. The only way forward would be to pay BSES Yamuna the subsidy amount. 

It's in the interest of the aam aadmi that the AAP ensures no power failure because it will not take them long to realise that costly power is better than no power.