Dark days ahead? Delhi discoms warn of payment crisis if rates aren't hiked

NEW DELHI: The tussle over power tariff in Delhi has escalated as distribution companies (discoms) have told the Arvind Kejriwal government that they are running out of money to pay generation and transmission companies because electricity rates in the city state are too low.

Further, banks are reluctant to lend to the financially precarious discoms in view of media reports about the Aam Aadmi Party's approach towards tariff and subsidies, distribution arms of Anil Ambani's Reliance Group told Delhi's Power Secretary Punit Goyal in letter on Monday.

This could lead to blackouts in Delhi if the issue continues to fester. In the past, NTPC had threatened to cut off electricity supply to discoms that had defaulted on payments saying outdated tariffs were not enough to meet rising costs.

"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," Reliance's power distribution units told Goyal in the letter that was reviewed by ET .

Reliance's distribution companies - BSES Yamuna Power and BSES Rajdhani Power - distribute electricity in two-thirds of Delhi, while a company of the Tata Group supplies power in northern parts of the city.
The discoms' stand is in sharp contrast to Aam Aadmi Party's crowd-pulling campaign that the previous Delhi government allowed these companies to get away with malpractices and inflated costs, which led to a sharp increase in power charges for Delhi consumers.

BSES said banks were concerned about the finances of distribution companies in Delhi. "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 DERC (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."

The distribution companies also reminded the government about the regulator's role in the matter.

DISCOMS SEEK EMPOWERED COMMITTEES

The distribution companies requested the Kejriwal government to constitute empowered committees as directed by the regulator last year.

In response to petitions filed by state-owned power generation and transmission companies to seek timely payments from BSES, the Delhi Electricity Regulatory Commission had directed the formation of empowered committees to assess inflow of funds and decide priorities for its utilisation.