Linking subsidy to dues risky: Experts

NEW DELHI: The new government's strategy to recover partial dues from the Reliance-backed BSES discoms through extended subsidy to consumers could backfire. BSES Rajdhani and BSES Yamuna owe the government-owned Transco and the generation companies IPGCL and PPCL approximately Rs 4,000 crore. The amount has added up over four years and as the discoms still don't have a plan in place to pay up, experts say, the taxpayer is effectively helping clear BSES dues through subsidies.

Of the Rs 200-crore hit the government will bear to increase the subsidy for people using less than 400 units, approximately Rs 140 crore will be paid to the BSES discoms. The government plans to adjust this against BSES' dues. "But since the discoms still have not said how they plan to repay their dues, it effectively means that public money will be used to settle a part of their accounts,'' said an expert.

The BSES discoms claim the tariffs in Delhi have not been in line with costs for many years. "We will start clearing our dues as and when we are in a position to do so,'' said BSES officials.

Early in 2013, Transco had sought DERC intervention on the money owed by the discoms. In November, after DERC directed it to pay the government, BSES slowly started paying its current dues to Transco, IPGCL and PPCL. There is still no clarity on when all the dues will be cleared and sources say it will take several years.

The BSES discoms have been known to default on payment to generating companies, including NTPC, DVC and NHPC. However, unlike NTPC which has threatened to regulate supply to the BSES discoms unless they pay up, the Delhi government is not in a position to regulate supply to them as it could lead to outages.