Two state-owned lenders to the electricity sector, Power Finance Corporation (PFC) and Rural Electrification Corp (REC), have rescued Reliance Infrastructure’s power distribution companies in Delhi by helping them pay off generator NTPC’s past dues.
PFC and REC disbursed a combined Rs 1,000 crore as loan to the two discoms — BSES Yamuna Pvt Ltd (BYPL) and BSES Rajdhani Pvt Ltd (BRPL) — on Saturday, the last day for clearing NTPC’s Rs 700-crore dues according to the Supreme Court’s May 6 order. NTPC had been threatening to cut Delhi’s supply if its dues were not cleared.
“PFC and REC have disbursed Rs 500 crore each, as requested by BSES. NTPC has been paid,” said a person close to the development. A senior NTPC executive confirmed, saying: “The Rs 700 crore due from the BSES firms has been paid. We will not regulate (cut off) power supply now.”
NTPC had in May sought the apex court’s permission to begin regulation of power supplied to the BSES firms, arguing nearly 75 per cent of the payments received from these companies went to Coal India, so if they did not pay, NTPC’s Badarpur thermal plant would not be able to supply electricity to Delhi.
The Rs 700 crore cleared on Saturday included arrears for power supplied by NTPC to the two discoms in April, besides part-payment for supplies to BYPL for electricity purchased between January and March. The apex court had allowed the generator to snap supply if it was not paid.
BSES firms claim they are facing financial crunch with a build-up of over Rs 15,000 crore of regulatory assets — recognised but unrecovered revenue — from consumers. The discoms had approached IDBI, State bank of India (SBI), PFC and REC for short-term loans to tide over the crisis. While IDBI and SBI had refused, PFC and REC had asked for a comfort letter from Delhi Electricity Regulatory Commission (DERC).
In the letter of comfort that the lenders received last week, DERC informed it had approved a plan to liquidate Rs 8,000 crore of regulatory assets to be paid to the Delhi discoms. The rising gap between cost of supply and retail tariff over the past 12 years since privatisation had pushed these assets to Rs 27,000 crore as of March 2014.