Delhi power battle intensifies as NTPC threatens to cut off supplies

The high-voltage drama over electricity supply in Delhi continued on Saturday, with the state-owned National Thermal Power Corp Ltd (NTPC), the country's biggest power producer, threatening to cut off its supply of 2,000 MW to BSES-owned power distribution companies from 11 February if their dues are not paid by then.

The two BSES 'discoms' operating in Delhi - BSES Yamuna Pvt Ltd and BSES Rajdhani Pvt Ltd - cater for the eastern, western and southern parts of the city.

The company controlled by Anil Ambani's Reliance Infrastructure, formerly known as Bombay Suburban Electric Supply, supplies power to two-thirds of the city-state, the rest being taken up by a Tata Group company.

Delhi's chief minister Arvind Kejriwal is fuming – his Aam Admi Party had made an electoral promise to reduce power tariffs by as much as 50 per cent. But Kejriwal's early moves in this direction have been stymied by economic realities. Instead of reducing tariffs, the Delhi Electricity Regulatory Commission (DERC) last week allowed private discoms to raise power rates by up to 8 per cent (See: Delhi residents hoping for power tariff cut will instead pay 8% more).

If the state government doesn't come to a quick arrangement with NTPC, Delhi could again suffer power cuts lasting 8-10 hours a day – bringing back the nightmare of 'load-shedding' that had been almost removed under the previous Shiela Dikshit government.

According to the power purchase agreement (PPA) between the discoms and NTPC, BSES has to provide a letter of credit for a certain minimum amount for continued supply.

In a notice sent by NTPC to both BSES discoms on Saturday, NTPC said, ''Since BYPL has not provided the LC of the requisite amount (creating a payment shortfall of Rs96 crore), notice for regulation of power supply for 90 days with effect from the midnight of February 11 is hereby given.

''Despite our repeated follow-up and meeting with senior BRPL officials, it has not been able to recoup the LCs for the full value within seven days, a breach of PPA provisions,'' the notice read. Under the PPA, NTPC has the right to regulate or sell a discom's share of power to a third party in the event of a shortfall in the LC.''

The supply of power will remain suspended for 90 days. In case BSES discoms fail to rectify the default (shortfall in LC) during the notice period, NTPC will have the right to terminate the PPA after intimating the discoms in writing. The Central Electricity Regulatory Commission (Regulation of power supply) regulations also provide for cutting supply in the absence of a payment-security mechanism.

Kejriwal on Friday made a wild threat to the discoms that he would cancel their licences. However, under the current provisions of the Electricity Act, 2003, cancellation of a discom's licence is in the exclusive domain of the state power regulator.

The regulator is required to establish ''public interest'' and serve a three-month notice before revoking a licence.