Sources said Delhi government had requested NTPC to extend the time limit for making the payments but the power generating company decided not to do so.
The NTPC told the government that it will snap power supply to the BYPL if the company does not pay the dues by this evening.
The decision by NTPC was conveyed hours after Chief Minister Arvind Kejriwal accused BSES discoms of trying to "blackmail" the government by threatening power cuts upto 10 hours a day.
Kejriwal even warned them of strict action including possible cancellation of licenses.
Reliance Infra-backed BYPL owes around Rs 120 crore to NTPC for supply of power for the month of December.
BYPL has already informed Delhi Government that areas under its jurisdiction may face eight to 10 hours of power cuts from Saturday as the company was facing serious fund crunch to buy electricity.
In a letter to Delhi's Power Secretary Puneet Goel, BYPL sought immediate financial assistance from the government to deal with the "difficult" situation as it was not being able to make payments to various state-run power generators including NTPC and NHPC.
The discom said banks have "withdrawn new funding support" owing to accumulated revenue arrears of Rs 6,200 crore and it was finding it difficult to arrange power for the city.
BYPL had sought immediate intervention of Delhi Government in helping it overcome the situation and urged it to take up the issue urgently with NTPC, NHPC, Ministry of Power and Ministry of Finance.
The company said banks are "alarmed" by Delhi Government's "subsidy-led" approach to tariffs, regardless of actual cost of power.
The BSES Yamuna Power Ltd and BSES Rajdhani Power Ltd, which supply power in 70 per cent areas in Delhi, owe around Rs 4,000 crore to Delhi Government-run power generation and transmission companies.
Both BRPL and BYPL have been maintaining that they are going through difficult financial condition. They have been demanding significant hike in tariff, citing rise in power purchase cost.