Threat of power cuts, lasting as long as 10 hours, looms large over East and Central Delhi

The threat of power cuts up to 10 hours a day looms large as one of the city’s power distribution companies, BYPL, has written to the Delhi Lieutenant-Governor and the Union Power Ministry saying that it has no funds to procure electricity starting February 1.

The discom, supplying power in East and Central Delhi, has said its cash flow position is “precarious” and it is unable to pay generation and transmission companies for the power it contracts.

“The government has stepped in to urge the generating companies to extend the time period for repayment of dues from 30 days to 90 days. We have also written to the Power Finance Corporation and the Rural Electrification Corporation to sanction loans to the discom,” said a senior Delhi Government official, admitting that there was a possibility of power outages in the city.

The discom’s claims of an untenable financial condition are buttressed by a recent report submitted to the government by PricewaterhouseCoopers (PWC) which finds that the city’s three discoms had a loss of Rs.900 crore in 2012.

The report also raises questions on the viability of the Aam Aadmi Party Government’s decision to slash power prices. Even as the Comptroller and Auditor-General (CAG) of India has begun an evaluation of the accounts of the three companies —BRPL, BYPL and TPDDL — the PWC report said there was a difference of nearly Rs.1.50 per unit in the sale and purchase of power. The report said the discoms had to sell surplus power at rates lower than the cost at which they purchased it.

The discoms feel vindicated that the PWC report has recognised their concerns about a non-cost-reflective tariff. “Unrealistic tariffs , the period since 2007-08 when regulatory decisions were made on wrong assumptions and a phenomenal increase in the power prices has contributed to the financial crisis,” said a discom official.

The report notes that the drop in sale prices led to BRPL suffering a loss of Rs.383 crore, BYPL had a loss of Rs.286 crore and TPDDL’s loss stood at Rs.323 crore.

The report further said that the only time that the discoms made book profits since privatisation of the sector was in the financial year 2005 and they posted profits up to financial year 2009.

It has recognised under-recoveries as a reason for the “eroded balance sheets” of the discoms, noting that despite a significant increase in power purchase cost since 2009, there was a marginal revision in the tariff between 2007 and 2012.

The discoms had “negative net worth” in all three years from financial years 2011 to 2013, this despite an equity infusion of Rs. 440 crore for BYPL, Rs. 580 crore for BRPL and Rs. 500 crore for TPDDL, the report claims. The companies have also been shown to have a revenue gap of 59 per cent during the same period.

The report, commissioned by the previous State government on the operational issues of Delhi’s discoms, was submitted to the Delhi Government recently.

The government, however, is tight-lipped about the report.

“We have seen the report and the useful and implementable suggestions will be adopted, but other than that it is just a study of the sector,” said a senior official in the Delhi Government’s Power Department.

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