Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

Editorial: Delhi’s power crisis

Feb 01 2014, 21:21 IST
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SummaryBSES firms owe Rs 5,200cr, they are owed Rs 14,800cr

Given the manner in which all concerned are upping the ante, there’s no saying where Delhi’s power crisis will end up—one of the three power distribution companies (discoms), BYPL, has said it may have to resort to 10-hour daily power cuts as it can’t pay suppliers and the chief minister, in turn, has threatened to cancel its licence along with that of any other discom that behaves the same way. While the immediate power crisis can be staved off with a small bridge loan of just Rs 200 crore to allow BYPL to pay NTPC and NHPC what comes due at the end of the month—alternately, the Central government can direct the two PSUs to extend the credit period—such problems are going to keep cropping up every month. In December, for instance, while the two BSES firms, BYPL and BRPL, owed suppliers Rs 5,200 crore, they owed NTPC nothing—they owed NHPC Rs 46 crore in December.

Since the power regulator has said the two BSES firms are owed Rs 14,800 crore—of this, Rs 4,900 crore is recognised by the regulator as due till FY11, Rs 9,900 crore is based on the projections made by the firms till FY13—it is obvious the final solution lies in letting the companies recover this from their customers. But since, due to populism, this was never done, the problem has become almost intractable today. As late as FY09, all three discoms in Delhi—two owned by BSES and one by Tata Power—were owed under Rs 1,000 crore. This is the shortfall between what the power cost them and what they charged customers. The next year, as power costs went up further, the discoms needed to hike power tariffs by another Rs 1,400 crore or thereabouts. The Delhi regulator, however, felt the hike would be too much, so it asked the discoms to add this to the other IOUs—regulatory assets, in jargon—on their books. Another hike of Rs 1,300 crore was required in FY11 but, as in the past, was added to the regulatory assets. Much the same thing has been happening each year. Since the power companies have been surviving on borrowed money, not surprisingly, they want their dues back. The Appellate Tribunal for Electricity (Aptel) has, in fact, ruled that while regulators should not create regulatory assets in future, the existing ones should be paid up within three years. That was in 2011. Since this Aptel

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