Large parts of Delhi face power cut from Wednesday

Millions of residents of Delhi face the prospects of a black-out from Wednesday, as Reliance Infrastructure, one of the two private distributors, has defaulted on payments of Rs.900 crore to state-owned National Thermal Power Corporation (NTPC).
 
NTPC, which supplies 2,051 MW of power to BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd – two subsidiaries of Anil Dhirubhai Ambani-controlled Reliance Infrastructure – has threatened to discontinue supplies from Tuesday midnight, if the company does not clear its dues.
 
Both the Reliance Infrastructure units failed to clear a bill of Rs814 crore for July, forcing NTPC to realise part of it – Rs334 crore – by cashing the letter of credit. In August, NTPC supplied Rs425 crore worth of electricity. With the balance from July, total dues work out to over Rs900 crore, claims NTPC.
 
The state-owned utility has warned that it would terminate the power supply agreement with Reliance Infrastructure from 1 December if the dues are not settled within 90 days.
 
According to a Reliance Infrastructure spokesperson, the company is in talks with NTPC and its bankers to resolve the issue. ''BSES stands committed to its 28 lakh (2.8 million) consumers and will make all efforts to ensure no inconvenience is caused to our customers,'' added the spokesperson.
 
Power distribution in the national capital was privatised in July and two leading private sector power distributors – Reliance and the Tatas – took over the distribution of electricity.

While BSES Rajdhani supplies power to south and west Delhi, BSES Yamuna caters to central and east Delhi. North Delhi Power Ltd (NDPL), part of the Tata Group, distributes power in the northern parts of Delhi.
 
According to NTPC, NDPL has cleared its dues and also maintained the required letter of credit or guarantee from banks. NTPC signed power purchase agreements (PPAs) with these private distributors in 2007, following orders from the Delhi Electricity Regulatory Commission (DERC).
 
Under the terms of the PPA, the distributors have to ensure availability of letters of credit covering the cost of power, through the validity of the agreement. In case the arrangement is not maintained, NTPC has the right to suspend power supply and terminate the agreement following a 90-day notice.
 
Reliance Infrastructure claims it has accumulated huge debts as power tariffs have not been revised for five years, even as costs have soared. The DERC recently increased power tariffs by 22 per cent.