HP hydel project in trouble after Delhi discoms put power purchase on hold

Facing cash flow problems due to a heavy build-up of regulatory assets (deferred revenue) and consumer resentment over high tariffs, Delhi’s BSES discoms ? BRPL and BYPL ? have become cautious in tying up for additional power supply, creating a problem for the state-owned SJVN’s Rampur hydel project in Himachal Pradesh.

A power ministry official said that BSES discoms, which have been together allocated 24 mw electricity from the Rampur project, have not signed power purchase agreements (PPAs) for power offtake from the project.

?The discoms are insisting that SJVN fix a cap on tariff for the project, a demand that SJVN is not in a position to accommodate,? sources added.

The Tata Power-promoted TPDDL has, however, signed a PPA for power procurement from the Rampur project.

BYPL and BRPL get about 70% of their supplies from NTPC, 18% Delhi power plants, 12% from Damodar Valley Corporation (DVC), NHPC, SJVN others. The current SJVN supplies are from its Nathpa Jhakri hydro power plant.

SJVN is a joint venture between the Centre and the Himachal Pradesh government.

The Rampur project has been developed by the SJVN under cost-plus regime.

Though final tariff for this project is yet to be determined by the Central Electricity Regulatory Commission, it is likely to be in the range of Rs 4 a unit.

SJVN sources told FE that the PSU is unable to start commercial operations (72 hours continuous operation at minimum 90% PLF) from newly-commissioned units of its 412 mw Rampur project as the Delhi discoms, which were allocated electricity from the project, have declined to sign PPAs with the state-owned generator, citing high tariff.

A senior SJVN executive told FE: ?We are waiting for the power ministry to nominate another buyer for power quantum abandoned by Delhi discoms for starting commercial operations.?

According to an expert, the other states of the northern region have the first right on power surrendered by the national capital. But if there is no taker for power within the region, the ministry can reallocate electricity to another region.

Apart from Delhi, Haryana, Chandigarh, Punjab, UP and MP have also been allocated electricity from the project. However, until power quantum surrendered by the BSES discoms is reallocated by the power ministry, the plant cannot start commercial operations.

According to experts, a plant can make infirm power supply to the grid, pending declaration of commercial operations.

However, before the start of operations, realised tariff is lower compared to normal tariff (which ensures 16% return on equity that is usually 30% of the project cost). In case of hydro power, the plants before commercial operations can at best recover the cost.

The Supreme Court last week gave the liberty to state-run power utility NTPC to cut power supplies to the BYPL and BRPL if they failed to pay dues of over Rs 788 crore by end of the month (NTPC is about to send another Rs 400-crore bill to the two discoms for supplies in May).

BYPL and BRPL told the court that they were not in a position to pay as their proposal for fresh loan of Rs 10,000 crore from state-run power sector financiers is facing uncertainty as the tariffs, despite some recent adjustments, are not enough to recover their unrealised past revenue (regulatory assets), now pegged at close to Rs 21,000 crore.

SJVN has till now commissioned nearly half of the project capacity, starting with synchronisation of the first 68.67 mw unit with the northern grid on March 20. It is yet to undertake testing for declaration of commercial operations. Delhi’s power consumers owe Rs 21,700 crore in regulatory assets to BYPL and BRPL, which has dented their credithworthiness.