Delhi's power struggle: NTPC threatens cuts to BSES firms from February 11

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NTPC, in its notice, has said that the two discoms failed to re-instate the payment security mechanism. NTPC, in its notice, has said that the two discoms failed to re-instate the payment security mechanism.
SummaryNTPC Ltd issues notices to the two ADAG group firms distributing electricity in Delhi.

A day after the power regulator in Delhi hiked retail electricity tariffs, state-owned power generator NTPC on Saturday issued notices to the two ADAG group firms distributing electricity in the capital -- BSES Rajdhani Power Ltd (BRPL) and BSES Yamuna Power Ltd (BYPL) -- threatening to regulate over 2,000 MW of electricity supplies starting February 11.

NTPC, in its notice, has said that the two distribution companies (discoms) have failed to re-instate the payment security mechanism (by opening a letter of credit or LC) within the requisite time-frame, as provided under the power purchase agreement between the power major and the two discoms. A disruption in power supplies by NTPC, one of the key suppliers of power to the capital, could impact over 32 lakh customers spread across the southern, eastern, central and western parts of Delhi.

NTPC's move to issue notices comes after it was forced to encash the LC opened previously by both firms on January 31, after the two discoms failed to clear its dues to the power generating company. “So, the shortfall in LC with effect from February 1 is Rs 271.61 crore (in the case of BRPL),” NTPC said in its notice sent to the two private firms. For BYPL, the LC amount is Rs 168.29 crore and there are pending payments of Rs 96.07 crore for January 2014.

NTPC said it would regulate 1,261 MW of supplies to BRPL and another 811 MW for BYPL. As per the power purchase agreement (PPA), maintenance of LC of adequate amount and timely replenishment of LC on negotiation is a pre-requisite for availing power from NTPC stations.

The discoms were supposed to clear the payments by Friday. Earlier, BYPL had informed the Government of imminent likelihood of load shedding of up to 8 to 10 hours in East and Central Delhi from next week. The utility claims to have no funds available to make payments to NTPC or NHPC for power supplies in January 2014.

NTPC has already turned down a request from the Delhi Government asking it to extend the payment schedule for (BYPL).

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