The tussle between Delhi government and its bureaucracy could jeopardise the Rs 11,000-crore loan approved by a group of lenders led by state-owned Power Finance Corporation (PFC) to Reliance Infrastructure’s power distribution companies (discoms) — BSES Yamuna and BSES Rajdhani — in the capital.
The final disbursal of loan is subject to a letter of comfort (LoC) to be issued by the Delhi government to the lenders as it holds 49% stake in the discoms and a third one run by a Tata Power subsidiary in the national capital region.
Delhi chief minister Arvind Kejriwal had opposed the appointment of Shakuntala Gamlin, principal secretary for power, as acting chief secretary of the state, alleging that she was lobbying for LoC on behalf of the discoms. “The two companies are joint ventures, where the Delhi government has a 49% shareholding. BSES companies are managed by board of directors, where 4 out of 9 members are nominated by the government and are senior IAS officers,” BSES wrote to Najeeb Jung, lieutenant governor of Delhi, clarifying its position in the aftermath of controversy concerning the LoC. It added that the LoC has been sought by PFC and not by Reliance Infra.
In another letter reviewed by FE, BSES has written to the principal secretary of finance on March 30 with details of the loan and had asked issuance of a ‘strong’ comfort letter to PFC.
“…PFC sanction alongwith the scheme of proposal, terms and conditions and proposed utilisation was duly considered and approved by the board of directors (including GoNCTD nominees) of BRPL and BYPL in a meeting on March 26, 2015,” it wrote.
The advances will enable the two discoms, under stress due to delays in monetisation of regulatory assets, to retire existing debt of half the size from a 19-bank consortium led by State Bank of India and pay the dues to the generation and transmission companies. The new loan will come with an interest relief of 1.5-2% that could bring down the cost of power by 13 paise per unit.
The Delhi government has been no stranger to issuing LoCs on behalf of the power companies in the past. It had issued LoC to NTPC in December 2011 to ensure that power supply remained uninterrupted. In May 2014, an LoC was granted to PFC and REC for raising short-term loans of R1,000 crore to pay power supplier dues in compliance of orders of the Supreme Court.
Of the R11,000-crore loan, about R5,000 crore will be disbursed by PFC while the rest will be available from other lenders in the consortium, a PFC source told FE. The tenure of the new loan, if approved, could be for a period of seven to eight years and the interest savings for the BSES firms would translate to about R250 crore annually.
RInfra will be pledging its entire 51% of shareholding in BSES discoms to the PFC-led consortium to avail the loan.
The discoms have been urging the state government since early January for a LoC for the loan approval. The Arvind Kejriwal-led government, which has ordered a CAG audit of the three Delhi discoms (Tata Power Delhi Distribution and the two BSES discoms), is yet to give any commitment on this.