BSES complains to Delhi govt on tariff reduction

Reliance Infra-backed BSES Rajdhani Power Ltd has sought Delhi Government`s intervention in overcoming its "precarious financial" condition in absence of "cost-reflective" electricity tariff.

New Delhi: Reliance Infra-backed power distribution company BSES Rajdhani Power Ltd has sought Delhi Government`s intervention in overcoming its "precarious financial" condition in absence of a "cost-reflective" electricity tariff in the national capital. In a letter to Delhi`s Power Secretary Punit Goyal, the company said it has been finding increasingly difficult to get bank loans due to delay in announcing a liquidation plan of existing regulatory assets and the new government`s approach towards tariff.

BRPL supplies power to around 44 per cent consumers in the city and its poor financial condition may lead to power cuts in the areas of its operation. "In absence of non-reflective tariffs, the already precarious financial condition of BSES is further worsening continuously, and this has placed insurmountable pressure on our ability to make payments to generating and transmission companies for power supplies," the letter said. The company said it has a total revenue gap of Rs 5,205 crore upto 2012. "In view of the non availability of cost reflective tariff for several years in the past, the cumulative shortfall in tariffs of BRPL up to 2012 has been recognised by Delhi Electricity Regulatory Commission in its tariff order in July 2013 at Rs 5205 crore," the letter said. According to DERC figures, the three private discoms operating in the city have a revenue gap of whopping Rs 19,500 crore. Power experts said any move to cut tariff will adversely impact the operation of the discoms in the city. "The recent media coverage reflecting the government`s desire to reduce tariff, declaration of increase in power subsidies coupled with the delay in announcing the liquidation plan of existing regulatory assets by Delhi Electricity Regulatory Commission have been taken note of by our bank lenders, and they have indicated that they will not be in a position to extend any further accommodation in meeting debt servicing obligation," said the letter. The discom was unhappy after Chief Minister Arvind Kejriwal, while announcing 50 per cent subsidy scheme, said that the amount payable to BSES discoms will be adjusted with their dues to government-run generating and transmission companies. Two Reliance Infra-backed discoms BRPL and BYPL owe over Rs 4,000 crore to Delhi Government-run power generation and transmission companies. In the letter, BRPL has also sought setting up of an Empowered Committee as suggested by regulator DERC to assess the flow of funds and other major issues. "We reiterate there is a critical and urgent need that the Empowered Committee as directed by DERC is immediately constituted and regular meetings be held, so as to assess the funds flow situation of the company and take appropriate steps, as may be recommended by the Committee," the letter said. Sources said all the three discoms are likely to seek substantial hike in tariff when the DERC takes up the tariff review process later this month. As per official figures, around 80-90 per cent of total revenue of discoms goes into purchasing power from central and state government owned entities through long term power purchase agreement, at rates determined by the central and state regulators. The experts said discoms` cost of buying power from generating companies has increased by around 300 per cent in the last two years while the power tariff, in the corresponding period, has risen by around 70 per cent. The cost of buying power has increased primarily on account of an increase in the input prices of raw materials like coal and gas, officials said. All the three discoms BRPL, BSES Yamuna Ltd and Tata Power Delhi Distribution Ltd are apparently unhappy with the Government`s decision to order CAG scrutiny of their finances. The power tariff in the city was hiked by 22 per cent in 2011 followed by five per cent hike in February last year. The tariff was hiked by up to two per cent in May last year and again by 26 per cent for domestic consumers in July last year. The tariff was hiked by up to three per cent in February and by five per cent in August.