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People in eastern and central parts of Delhi should be prepared for power cuts lasting 8-10 hours from Saturday, as the distribution company catering to the two regions, BSES Yamuna (BYPL), has sent an alert over its “unviable” financial situation.
The second-largest of the three private discoms in the national capital supplies to 1.35 million consumers.
BYPL chief executive officer Arvind Gujral told Delhi power secretary Punit Goyal in a letter: “Unfortunately, it appears inevitable that there will be substantial load-shedding of up to eight-10 hours, possibly as early as from February 1, in our licence area, causing grave hardship to millions of our valued consumers in east and central Delhi.”
Gujral argued BYPL does not have the financial resources to pay generation and transmission firms; banks have stopped credit flow owing to accumulations of revenue gap (regulatory assets) of an estimated Rs 6,229 crore; and there were no funds to pay aggregate dues of Rs 204 crore to central generation companies NTPC and NHPC for power procured in January.
“In the wake of non-payment for January dues, no surviving letters of credit (LCs) and no visibility on how the arrears will be cleared, NTPC and NHPC have indicated they will regulate power to BYPL, resulting in depletion of over 500-Mw supply from early February 2014,” Gujral said. He blamed the financial mess on retail rates that do not cover the cost of supply.
The development follows Delhi Chief Minister Arvind Kejriwal ordering a comptroller auditor general (CAG) audit of the city’s three private discoms — Reliance Infrastructure-owned BYPL and BSES Rajdhani, as well as Tata Power subsidiary Tata Power Delhi Distribution Ltd. He argued the audit would expose financial irregularities. Kejriwal also announced a 50 per cent rate cut through subsidy. Discoms are contesting that order in the Delhi High Court.
Gujral said the inadequate rate resulted in a shortfall in revenue, temporarily bridged through short-term borrowings. He added BYPL had been “constrained” to make only partial payments to Delhi gencos and Transco, dues to which touched Rs 1,351 crore as on December 31. Central gencos DVC and SJVN have already regulated 259 Mw to BYPL after failing to get full payment.
He urged the Centre to advise NTPC, NHPC, SJVN and DVC to continue to supply power to BYPL without any disruption by extending 90 days of credit.
He also asked the finance ministry to advise banks to provide additional fund-based credit to BYPL for payments to suppliers and ask Power Finance Corp (PFC) and Rural Electrification Corp (REC) to provide funding against Regulatory Assets (unpaid arrears) of Rs 6,229 crore.
The cost of power for discoms almost doubled from Rs 2.67 a unit in 2007-08 to Rs 5.25 in 2011-12. The net worth of the discoms has eroded despite equity infusion of over Rs 1,000 crore in BYPL and BRPL in 2011-12, while Tata Power promoters, too, brought in Rs 500 crore recently. BSES companies claim to have under-recovery of Rs 14,775 crore and TPDDL claims Rs 4,735 crore from consumers, due to lower tariff and rising costs since privatisation in 2002.
