New Delhi Blackout Risk Spurs Minister to Urge Payment of Dues

India’s power minister Jyotiraditya Scindia said electricity distributors in capital New Delhi should clear overdue payments to state-run NTPC Ltd. (NTPC), after the nation’s biggest generator threatened to cut off supplies.

NTPC said it will stop supplies starting Feb. 11 because distributors BSES Yamuna Power Ltd. and BSES Rajdhani Power Ltd. failed to pay a combined 5.34 billion rupees ($85.4 million) in dues and letters of credit. The companies are 51 percent owned by billionaire Anil Ambani’s Reliance Infrastructure Ltd. (RELI), with the rest controlled by the city’s government.

“The dues which are rightfully NTPC’s should be paid as soon as possible,” Scindia said in New Delhi today.

A halt in supplies from NTPC would affect Delhi’s 22.7 million people and could lead to blackouts of the kind that left more than 620 million people in northern India without power for three days in July 2012.

Delhi’s government, led by graft fighter Arvind Kejriwal, is seeking a probe of the distributors’ accounts and has asked the power regulator to cancel their licenses if they stop supplies. The companies contend government-set tariff increases fail to compensate the rising cost of power.

The city’s power regulator on Jan. 30 allowed the distributors to boost tariffs by as much as 8 percent for the three months ending April 30.

“The company no longer has the financial ability or resources to pay the generation and transmission companies in full,” Arvind Gujaral, chief executive officer of BSES Yamuna Power, wrote in a Jan. 25 letter to Delhi’s power secretary. “Owing to accumulated revenue gaps and in light of other recent developments, all banks have stopped entertaining proposals for additional credit to the company.”

Kejriwal’s one-year old Aam Aadmi Party, or the common man’s party, rose to power on the promise of providing free water and cutting electricity prices by half. His success spurred other provinces to adopt populist electricity price cuts, jeopardizing efforts to revive the finances of distribution companies that have amassed more than $30 billion in losses due to years of state-controlled power prices.

To contact the reporters on this story: Abhijit Roy Chowdhury in New Delhi at achowdhury11@bloomberg.net; Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net

To contact the editor responsible for this story: Arijit Ghosh at aghosh@bloomberg.net

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