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Home News Power Sector News Delhi - Private Discoms unites against DERC for getting tariff hike

Delhi - Private Discoms unites against DERC for getting tariff hike

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DERCThe ongoing war between the discoms and the Delhi Electricity Regulatory Commission (DERC) over tariff fixation has turned murkier. Violating directions issued by the regulator not to discuss tariff-related issues with the media with the subject still being sub judice top officials of discoms BSES Yamuna, BSES Rajdhani and NDPL came together on one platform  to tell the media how the regulator was being "unfair'' and how it had always failed to give them their due when it came to tariff.

Putting aside their own business rivalry, CEOs Sunil Wadhwa (NDPL), Gopal Saxena (BRPL) and Ramesh Narain (BYPL) presented a united front against the regulator to justify Delhi government's move to stall the tariff order, insisting it was in `consumer interest'. The three discoms together claimed a combined revenue gap of Rs 2,600 crore.

Surprisingly, the discoms showed no faith in the still-unreleased tariff order of 2010-11 and hinted that it would have been "disastrous'' if it had been announced on schedule. The discoms' anxiety was evident from the fact that their representation to the government to plead their case came only two days before the expected tariff announcement date. A top discom official admitted they anticipated a disaster that could "lead to outages'' and that they did not want to wait to challenge the order in the Appellate Tribunal of Electricity.

Sources said the discoms informed DERC about the press conference only minutes before it began. "By the time commission members and the DERC chairman were able to issue gag orders, as media interaction on tariff is a clear violation of the directions issued by the regulator, the conference was over. This is clearly a case of contempt of court as DERC is a judicial body,'' said an official.

The CEOs, however, did not say how much of a hike in consumer tariff they needed to tide over the "crisis'', instead saying diplomatically that they needed a cost-reflective tariff. Considering that the discoms had asked for a hike of up to 70% in their ARR petitions submitted to DERC late last year, the "cost-reflective tariff'' as quoted by the power companies are likely to make a huge hole in consumer pockets.

The discom heads further said they had even approached the government for a loan as banks were "unwilling'' to cooperate with them. "We have reached a situation where we are taking more loans to pay back earlier bank loans. How can any business survive like this? We appeal to all quarters to understand the gravity of the situation,'' said BYPL CEO Ramesh Narain.

"DERC's estimates of power purchase costs are much lower than actual expenditure. This had led to a huge cash flow crisis,'' said NDPL CEO Sunil Wadhwa.
For the first time the three discoms — BSES Yamuna, Rajdhani and North Delhi Power Limited —  have sought a combined Rs 700 crore from the Delhi Power Company Limited (DPCL), the holding company through which the government owns its share in the discoms.

“We have sought Rs 400 crore as loan from the government,” Sunil Wadhwa, CEO, NDPL, told Hindustan Times.

This loan comes from what is called the Power Sector Stabilisation Fund, which charges a mighty 13 per cent interest — more than market rates. Discoms said they had no other choice as banks have refused to give money saying their operations were unviable.

But the audited accounts still show healthy Earnings Per Share (EPS) in each discom. The EPS is one of the surest, industry accepted ways of gauging a company's financial health as perceived by banks, investors, etc.

While BRPL’s EPS went from Rs -2.36 to Rs 4.06, BYPL’s jumped from Rs 4.97 previous year to Rs 6.63 and NDPL’s doubled from Rs 3.11 to Rs 6.48 last financial year.

DERC officials, however, rubbished the claims, saying all discoms were given their full power purchase costs in previous tariff orders. "As for the projections we made for power purchase costs in 2010-11, how can discoms know what has been allowed since the tariff order has not been declared. But rest assured, they are given more than their expenses,'' said a DERC official.

Delhi government’s surprising last-minute decision to intervene in the power tariff matter would deny consumers a lower tariff that was on the cards. Delhi Electricity Regulatory Commission (DERC) still has the power to go ahead with a new tariff if the two commission members and chairman agree. But, the two members of the commission do not agree with the chairman and have decided to go with the government directive.

With present chairman, Berjinder Singh, due to retire in September, all opposition will disappear in a few months.

A source said that by then, discoms will bring forward new data justifiying a hike, and by October, a new tariff will be announced.

While the audited accounts of all three discoms — BSES Yamuna, BSES Rajdhani and NDPL — in the last financial year show a healthy profit, DERC found that in the next four years, the suplus would be even greater — about Rs 10,000 crore.

The discoms, which are complaining about cash flow problems, have not been divulging complete information, say sources.

Source- Times of India
 

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