SC asks NTPC not to halt supply to BSES

Written by fe Bureau | New Delhi | Updated: Feb 8 2014, 10:39am hrs
Averting a blackout in the capital next week, the Supreme Court on Friday directed state-owned NTPC not to disconnect power supply to two Reliance Infrastructure-owned distribution companies until March 26. However, it directed the power distribution companies BSES Rajdhani Power (BRPL) and BSES Yamuna Power (BYPL) to pay R50 crore to NTPC within two weeks.

NTPC had threatened to snap the power supply to the two firms after February 10 if they failed to pay up R96 crore.

Coming on top of Wednesdays appellate electricity authority directive to the Delhi Electricity Regulatory Commission (DERC) to not suspend the licences of the two discoms without its consent during the pendency of a related matter before it, the SC direction amounted to more relief for the two Anil Ambani-backed companies.

The two discoms have been pressing for expeditious liquidation of their regulatory assets (deferred revenues) and faster release of subsidy amounts by the state government to be able to pay up the dues to NTPC and other generators.

Earlier, acting under a state government directive to be prepared for suspension of the discoms licences, the DERC had served notices to the discoms.

A disruption of supplies by NTPC, one of the key suppliers of power to the capital, could have impacted over 25 lakh consumers spread across the southern, eastern, central and western parts of Delhi.

The Delhi government on Monday had asked DERC to revoke the distributors licences if they halted electricity supply.

A bench comprising justices SS Nijjar and AK Sikri also asked the Union power ministry, NTPC, the Delhi government, Power Grid Corporation, DERC, NHPC and Damodar Valley Corporation to respond to the utilities petitions by February 21.

While directing NTPC to maintain supply until March 26, the next hearing, it observed that finally, the consumer would be the sufferer. We have to think about them.

BRPL's last letter of credit was encashed on January 31, leaving a shortfall of Rs 27l.61 crore. There is a payment shortfall of Rs 96.07 crore in the case of BYPL. The present allocation of power from NTPC is 1,261 MW for BRPL and 811 MW for BYPL.

Senior advocate Mukul Rohatgi, appearing for the distribution companies, submitted that the Delhi government is not paying Rs 15,000 crore it owed to the firms as regulatory assets and its recent move to audit the firms was politically motivated.

BRPL in its petition pointed out that against the regulatory assets of Rs 5,206 crore that the discom wants to be expeditiously liquidated, its outstanding dues to its suppliers stand at only Rs 1,071 crore.

The bench then observed that the amount of over Rs 300 crore that is to be paid to NTPC is a small amount for Reliance. You won't go bust by Rs 300 crore. We are sure that you will be able to pay the amount..., the bench said.

The court said if Reliance Infrastructure, which runs the two discoms in the capital in a joint venture with the state government, was not finding its business viable, it can make alternative arrangements. The apex court said this as Rohatgi was trying to drive the point that the discoms were totally cash-strapped and had no money to pay power producers.

Blaming both the Delhi government and DERC for their financial losses, the discoms said that the commission's illegal decisions had forced them to take loans to fund their day-to-day operations. Rohatgi also said that DERC had issued notices to suspend their licences at the Delhi government's behest despite earlier admitting that the discoms suffered losses due to tariff structures and advising the government to take various ameliorative measures.

He sought a direction to the Delhi government to immediately release the subsidy due to BRPL (Rs 166.35 crore) and BYPL (Rs 95.79 crore) to help them pay off their dues to NTPC.

BRPL said that DERC's impugned actions have unlawfully deprived it of its entitlements to recover legitimate dues of around Rs 5,206 crore (regulatory assets) along with assured return on equity of 16%. According to the BSES discoms, the unreasonable, arbitrary and unlawful treatment meted out by the commission and the Delhi government can be gauged from the fact that the DERC in its statutory advice of December 15, 2010, and February 1, 2013, had admitted that BRPL's tariff causes a loss of over Re 1 per unit since tariff determined is not cost reflective, causing discoms to resort to extensive borrowing. In fact, the commission had advised the Delhi government to take various ameliorative measures set out in statutory advice of February last year, the discoms added.

Instead of either of them addressing the issues at hand, the DERC initiated proceedings on Tuesday for suspension of the licence of BRPL at the behest of the Delhi government, BRPL said.