SC dismisses BSES petition to vacate stay on higher tariff

Written by Noor Mohammad | Noor Mohammad | Indu Bhan | Indu Bhan | New Delhi | Updated: May 20 2014, 11:54am hrs
Taps powerIf the BSES discoms fail to pay Rs 788 crore by May 31, NTPC can snap power supplies to them.
The Supreme Court on Monday rejected pleas of Delhis power distribution companies BSES Yamuna Power (BYPL) and BSES Rajdhani Power (BRPL) to vacate the stay on implementation of the sectoral tribunals direction to the state regulator to increase electricity tariff. The discoms have argued that if the tariff is increased, their cash flows will improve, enabling them to repay dues to NTPC.

As per an earlier SC order, the two companies were required to pay the state-run power generator Rs 788 crore by May 31. (NTPC has since sent fresh bills to them.) Both BRPL and BYPL are facing the risk of their R10,000-crore loan proposal getting rejected by a consortium of financial institutions. The fresh loan is key to the sustainability of their business given the mounting regulatory assets (deferred revenue).

If the BSES discoms fail to pay Rs 788 crore by May 31, NTPC can snap power supplies to them.

Hinting at the possibility of power cuts in Delhi, BSES senior counsel Mukul Rohtagi told a vacation bench headed by Justice BS Chauhan that it should vacate its earlier order that stayed the implementation of the Appellate Tribunal for Electricity's direction in November last year to the Delhi Electricity Regulatory Commission (DERC) to increase the tariff. The apex court had stayed the tribunal order after DERC challenged it.

However, the bench declined relief even as Rohatgi argued his clients were in financial crunch. While issuing the notice to DERC, the apex court posted the matter for hearing on July 3, along with the regulators petition. The judges observed that vacation of its stay order would render the DERCs appeal infructuous.

Aptel had ordered DERC to take immediate steps for bridging discoms' revenue gap and outline a amortisation (payment) schedule. Besides, the tribunal had also directed DERC to allow discoms to recover fuel and power purchase costs regularly and effectively so that they could avert cashflow problems and ensure uninterrupted electricity supply in the national capital.

According to the discoms, a vacation of stay on the tribunal's judgement would help ameliorate the financial position and ability to discharge obligation in respect of current payments towards generation companies and help them comply with the May 6 orders of the apex court.

In their application, BYPL and BRPL complained of how the DERC had not allowed them to recover their losses from tariff. Also, the Delhi government had further caused prejudice to their case as it has threatened to take punitive action against them if they do not pay all the generating and transmission companies.

It is submitted that Delhi Commission has contended that it has provided the petitioner (companies) with a cost-reflective tariff for 2013-14 which is sufficient to meet the current cost. However, it has failed to take into account that in order to bridge the revenue gap in the past period the applicant has taken loans alongwith interest which have to be repaid in the current financial years, the application read.

Another bench of the Supreme Court had on May 6 rejected BSES' applications seeking extension to pay dues. BSES had refused to settle the dues until the issue of arrears, amounting to about R20,000 crore , was sorted out.