Delhi Power Woes: Anil Ambani’s Firms May Soon Owe NTPC Rs 880 Cr

BSES will make payments in tranches to clear a portion of the Rs 1,295.23 crore outstanding dues to NTPC.

Reliance Infrastructure distributes power in Delhi via two subsidiaries, BSES Yamuna Power and BSES Rajdhani Power. (Photo: iStockphoto)

After missed payments, threats and a compromise, Anil Ambani’s power distribution companies in Delhi will still owe state-run NTPC over Rs 880 crore by September.

The Compromise Payment Schedule

BloombergQuint has accessed the letter sent by Reliance Infrastructure subsidiary BSES to NTPC on 16 May. According to the letter, BSES will make payments in tranches to clear a portion of the Rs 1,295.23 crore outstanding dues to power producer NTPC.

UP Pani, NTPC’s Acting Director-Commercial, told BloombergQuint, that BSES has initiated payment of dues.

We have received the first tranche of payment of Rs 303 crore for dues owed by BSES companies.

According to the payment schedule outlined in BSES’ letter, the company will pay Rs 580 crore in the second tranche in July 2016 for fresh procurement and clearing of dues.

Reliance Infrastructure distributes power in Delhi via two subsidiaries, BSES Yamuna Power Limited (BYPL) and BSES Rajdhani Power Limited (BRPL). According to the BSES website, BYPL caters to 14 lakh customers in Central and East Delhi while BRPL supplies power to 21 lakh customers in South and West Delhi.

The Rs 880-Crore Shortfall

BSES proposes to bundle payments for fresh procurement with the existing dues to mitigate costs. By 30 September, BRPL would owe NTPC Rs 520 crore and BYPL will owe Rs 366 crore.

BSES official in an email statement stated, “It is proposed that by September 2016, payments will be made within 60 days from the due date”.

NTPC’s Threat

In a letter dated 4 May 2016, NTPC stated that BRPL owes Rs 892.30 crore while BYPL owes Rs 402.93 crore. In the letter, NTPC pointed out that BSES companies are yet to pay for the 2,027 MW of power it had supplied to BSES between December 2015 and March 2016.

The state owned power giant had in fact threatened to restrict power supply to BSES from 10 May 2016 if BSES did not give clarity on future payments. BSES proposed the new repayment plan on 16 May in a bid to placate NTPC.

On average, NTPC charges BSES companies Rs 350-360 crore per month. A high ranking NTPC official said BloombergQuint on condition of anonymity that while peak summer demand will aid BSES’ efforts to repay dues, subsequent monsoon-driven demand slump may make it hard for the private firms to pay up.

Delhi Power Supply Realities

BSES in a written response to BloombergQuint pointed out that tariff has not kept pace with the cost of power in Delhi.

Since privatisation in 2002, there has been an increase of around 300 percent in the power purchase costs, an uncontrollable cost. On the other hand, the retail tariff has increased by around 90 percent. This has led to a huge revenue gap and cash flow mismatch, which is seriously affecting BSES’ ability in timely meeting its payment obligations. 

BSES Official 

Delhi Govt’s Response

The Arvind Kerjiwal government in Delhi is staying out of matter for the time being. Nagendar Sharma, a spokesperson for the Delhi government, told BloombergQuint over the phone that BSES dues are an internal matter of the private company.

The Delhi government does not have a view of the dues that BSES owes NTPC. BSES is a private company. The Delhi government is committed to providing uninterrupted power supply to residents of Delhi.

Nagendar Sharma, Spokesperson, Delhi Government

Higher Power Bills?

BSES has its hopes pinned on the new tariff order that is expected to be notified by the regulator by September this year. It hopes this will improve liquidity position for the company. But this could also mean higher power bills for Delhiites starting October this year.