Delhi govt: Revoke license of BSES if power stopped

Discussion in 'Politics & Society' started by Singh, Feb 4, 2014.

  1. Singh

    Singh Phat Cat Administrator

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    Hardening its stand on the issue, Delhi government on Monday recommended to power regulator DERC to revoke the license of Reliance Infra-backed power distribution companies if they they fail to pay dues to NTPC and resort to long outages in large parts of the city citing fund crunch.

    In a letter, the government conveyed to Delhi Electricity Regulatory Commission (DERC) that extensive blackouts due to financial difficulties of BSES discoms will not be acceptable.

    "The stand of discoms that due to their financial difficulties, they will be unable to supply power to consumers of Delhi for long hours in a day calls for revocation of their licences by DERC under section 19(d) of the Electricity Act, 2003," the government told DERC.

    State-run power generator NTPC had on Saturday served notices of power supply suspension to the two Anil Ambani-owned distribution companies and said electricity supplies will be snapped if they do not clear their dues by February 10. BSES discoms supply power in nearly 70 per cent areas in the city.

    Both the discoms have already said they were reeling under severe fund crunch due to which payments to NTPC could not be made.

    Terming it as a "most serious matter", the government requested DERC to find out from the two discoms in the next two or three days as to whether they are going to stop power supply to consumers of Delhi beyond February 10.

    "In case, these discoms continue with their stand, DERC may not have an alternative but to suspend their licenses immediately, as a first step, under para 13 of the terms and conditions of their distribution licences," the government said.

    Indicating that government may take over power distribution, it said that in the event suspension of licences, "suitable officers" will have to be appointed as administrative officers of BSES discoms.

    The government also requested DERC to identify the officers who could be appointed as administrative officers immediately if the situation demands so.

    "It is requested that officers who could be appointed as administrative officers of discoms may be immediately identified in consultation with the Chief Secretary so that if need be, immediate action is possible and consumers and Government of Delhi are not caught napping," the letter said.

    Sources said Delhi government has already requested lending institutions Power Finance Corporation and Rural Electrification Corporation to provide financial help to the two discoms.

    Delhi govt: Revoke license of BSES if power stopped - Hindustan Times
     
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  3. Singh

    Singh Phat Cat Administrator

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  4. rajsking

    rajsking Regular Member

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    Well electricity is one of the topic close to me.
    Till 15 -16 years ago, my state was power surplus state and used to sell power to other states, Then the newly elected govt declared that they will give free power to farmers. Logic : we have surplus power - so why not. With time, electricity board were left with no money to augment the power supply. During these years power demand has increased but power generation could not keep pace with it. Farmers switched to growing water intensive crops ( as there were free power) resulting in sharp decline in water table across the state. As water table falls further, power requirement rises and more power is diverted from other sectors to the agri sector. This all is happening inspite of various reports which have pointed out that if the trend continues within next 10-15 years most of the land will become arid. Industry sector is now facing 2-3 days of power cut in peak summers - which make any new industry/investment unviable - (unless you make arrangements for your own power). Existing industries are also migrating out of the state. Cities, which would not experience more than 2-3 hours power cut in 90s, are now experiencing 12-16 hours power cut in peak summer. Non agri sector consumers suffered double wammy. If 90% poeple pay and 10% do not pay then burden is managable. But if 40% of electricity goes unbilled (i.e. increased free power supplied to agri sector) then the users of remaining 60% will be made to pay much higher electricity price.
    Urban households, not only are facing an erratic power supply, they are paying one of the highest power price prevailing in India for the same. Atleast, for Metroes we can say that high price is charged as quality of power is good - Here we are paying almost equal prices but still are facing upto 16 hours power cut.
    End result - the state which used to top in almost all the economic indicators have fallen behind - far behind than all other states. Governments - come and go. But no govt have shown guts to stop the populist measure of giving free electricity to agri sector - even now when we dont even have suficient power to meet our needs.

    Hence, I detest, to put it mildly, giving any kind of subsidies, unless the govt is putting its own money. Otherwise, once given, it cannot be taken back and like a termite, it will keep on eating the system till it destroys the whole system.

    I happened to study Delhi's regulatory framework and got to know about working of DERC and DISCOMs. Prima-facie, I can say that the present mess itself is created by populist measure of previous govt. When private discoms were set up, govt had established a fund from which it used to pay any difference between power purchased and recoveries made from consumers. Later, power purchase was made revenue neutral i.e. DERC was supposed to approve tariff in line with the increase in power purchase cost. But, due to government pressure, the trend has been that DERC has been approving much less tariff. With time, the amount payable by govt ( the under-recovered amounts + interest+ fixed profit margin on this amount) ballooned to 1000s of crores.
    HAD THE PREVIOUS GOVT PROVIDED THIS MONEY ON TIME - FUTURE CONSUMERS WOULD HAVE BEEN SAVED FROM PAYING THIS UNRECOVERABLE AMOUNTS OF EARLIER CONSUMERS AND THAT TOO WITH INTEREST ALONG WITH THEIR OWN DUES.
    Present-day situation is that inspite of about 300% increase in power purchase cost, DERC has only allowed 70% of the increase in power tariffs. It was estimated that to completely wipe-off this under recovery the power tariff needs to be revised to the tune of 30% for atleast three years.

    Role of distribution companies are very miniscule in the power tariff. Distribution companies invest in power infrastructure (transformers, transmission lines etc) to minimize T&D losses and earn a fixed markup/profit on such investments made. Distribution charge accounts of hardly Rs 1-1.50 per unit. (as against Rs 6-7 paid by consumers). Even if CAG comes to extreme conclusion that these companies are 100% corrupt and had not invested even a single rupee on capex - the maximum AAP govt can bring down the tariff is by 1-1.50 per unit.

    I am not saying that power companies are not corrupt, They must be marking up the prices at which they buy infrastructure. But still their markup should be much less than that prevailing in the public distribution companies (if you consider bribes paid as markup on the actual purchase price). Even if CAG says that 20% of capex did not happen - power tariff will be affected by just 20-30 paise.
    Even if the companies are involved in unscrupulous activity of installing fast meters, that extra amount so made is not going into the companies pocket. In fact, such amount will only result in off-setting the under-recoveries. And lesser the under-recovery carried forward, lesser will be the tariff.

    No doubt, the power tariff is beyond the paying capacity of common man - but the approach AAP is taking is totally wrong.
    The under-recoveries are being carried forward in the book of distribution companies as Statutory assets. Bank keep on financing these amounts as the amounts payable by govt is expected to be paid back with no risk involved. But if the govt of the day, refused to honour its amount payable publicly, banks will take note of the risk involved in financing such amounts and will stop the credit limit. This has happened in Delhi. So again, AAP has shown its immaturity in governance.

    AAP should firstly have tried to bring down power purchase price. It could have directly negotiated with power producers like NTPC or should have gone ahead to setup its own power plant. Next, it should have ensured that unnecessary burden (of previously unpaid dues) are cleared off. I have no doubt that in their ego, they can even choose to takeover the distribution companies. Initially, they can provide relieve of 1-1.5 Rs/unit (i.e. if entire distribution cost is reduced to ZERO) but it will not be sustainable. Without maintenance, the infrastructure will deteriorate and T&D losses will again reach previous highs of 45-50% from today's value of 15-20%

    Here, even I cannot suggest a solution, but the desirable situation is that the tariff should be made affordable and all previous under-covered amounts should be paid off - so that future consumers are not taxed with unnecessary burden. But AAP govt do not have even Rs 200 crores to pay for the temporary subsidy announced by them - where will they find resources to clear 10-15,000 crores of previous debts.
     
    Last edited: Feb 5, 2014
  5. Known_Unknown

    Known_Unknown Devil's Advocate Stars and Ambassadors

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    No electricity supplier *wants* to create outages. Outages reduce electricity consumption, in turn reducing earnings and profits for the supplier. So threatening to revoke licenses if outages occur is an absurd way of dealing with the issue. Why do I feel like this so-called "IIT trained" engineer Kejriwal is a dumbass with no real understanding of complex processes and policies?
     
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  6. sayareakd

    sayareakd Moderator Moderator

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    yeah please revoke their licence they always over charge and always seems to be cutting electricity.
     
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  7. Free Karma

    Free Karma Senior Member Senior Member

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    5 points for Kejriwal to consider on power tariff | Business Standard

     
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  8. Singh

    Singh Phat Cat Administrator

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    Delhi Govt is 51% owner of BSES Rajdhani and BSES Yamuna. And Anil Ambani backed companies own the rest 49%.
    49% of NDPL is owned by TATA, which is so far running smoothly.

    ==

    If Anil Ambani's company is going into losses then it should leave. Is Mr. Anil Ambani a samaj sevak ?

    DMRC was forced to takeover Delhi Airport Metro from Anil Ambani's company. It had screwed it and was kicked out.

    The irony. :lol:
     
  9. Ray

    Ray The Chairman Defence Professionals Moderator

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    Must revoke the licence.

    But then what happens to the electricity supply to those areas where this compnay is supplying electricity?
     
  10. Ray

    Ray The Chairman Defence Professionals Moderator

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    @Singh

    Ambani were kicked out from the Metro.

    DMRC has to manage the entire debt of about Rs. 2,000 crore, then DMRC wants the Central Government and Delhi Government to arrange the money.

    Who have covered the debt and the losses?
     
    Last edited by a moderator: May 10, 2015
  11. Singh

    Singh Phat Cat Administrator

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    I was being too dramatic when I said Ambani was kicked out. The CongBJP can't kick out Ambani. He was not making a profit, he shut the metro down for a better part of the year on some filmsy ground. DMRC was forced to takeover.

    Please file an RTI for the nitty gritty.

    O/T Kejriwal was behind RTI bill getting enacted.

    ==

    The defaulting company is taken over by Delhi Govt / ESMA is applied / NDPL is given charge of the rest .... lots of possibilities.

    There are three companies supplying electricity in Delhi. 51% ownership of all 3 lies with Delhi Govt. 2 are owned by Ambani, 1 by TATA.
     
    Last edited by a moderator: May 10, 2015
  12. Ray

    Ray The Chairman Defence Professionals Moderator

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    I won't file any RTI I assure you.

    I am enjoying seeing the Delhites rejoicing their freebies and then some!

    The shoe pinches who wears the shoe.

    Let it pinch so that they realise which side of the bread is buttered.

    They have lived too long on the Union Govt bailing them out for too long and having luxuries and beautification mostly at the Union Govt's funds.

    Sure the Delhi Govt can take over the Discoms, but then they will have to bear the losses too. Soon it will be a case of Robbing Peter to pay Paul and sinking Delhi into a holy mess


    I thought Rahul Gandhi was behind the RTI bill and not Kejriwal!
     
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  13. sob

    sob Moderator Moderator

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    Two above posts from @rajsking and @Free Karma puncture lot of holes in the hot balloon of the Delhi Govt.

    This just exposes the fact that either Mr.Kejriwal is not doing his homework or he is lying upfront to the people of Delhi ( similar to the Ugandan embassy letter).
     
    Last edited by a moderator: May 10, 2015
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  14. Singh

    Singh Phat Cat Administrator

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    Why not ?

    ===
    Let us do the math and reason together.

    1. Delhi Govt had to write of 139 crores owed to them by the Distcoms. Instead it paid 62 crores more and get 201 crores worth of subsidies. This is just a one off thing. So 62 crore Rs. subsidy. Please see the second post of this thread. I am sure an independent minded person, like yourself, would find it quite persuasive.

    2. Water subsidy is less than the profits made by DJB. Minimal loss to the Delhi Govt's treasury.

    Any other freebie I am missing ?

    ===
    I would prefer an argument high on facts and less on rhetoric (and envy?)

    ===
    Delhi Govt in the past had bailed out BSES on one or two occassions.

    ==
    Sir, you are incorrigible.
     
  15. angeldude13

    angeldude13 Lestat De Lioncourt Senior Member

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    I guess people don't know much about kejriwals dumb a$$ry in sangam Bihar.

    In sangam vihar people get water through private tubewells and they have to pay 600rs per month to the private suppliers.

    Mr kejrival ordered Delhi JAL board engineers to make a pump house out of those tube wells.
    There were 48 tubewells that were replaced by pumps.
    So 48 pump means 48 pump drivers,48 beldars and at least 10 fitter.
    Mr dumb kejriwal forgot to recruit the required manpower to run a pump house.
    Several Engineers tried to convey the message that extra pump house means extra people to run it but sir kejriwal is too arrogant to listen to corrupt JAL board engineers.
    After this the private suppliers asked for the compensation because pumphouse were made on there land and went to the court.
    To sort this matter outside the court AAP party decided to give these pumphouse back to the private suppliers.
    Private suppliers in turn increased the amount to 800rs which was 600 rs per month.

    List of kejriwals dumb a$$ry
    1. Making a pumphouse without recruiting the manpower to run it.
    2. Forgot to give compensation to the private owners who owned the land on which pumphouse were made.
    3. Returning pumphouse to the private suppliers. Now these private suppliers won't have to pay any electricity bill as Delhi JAL board will pay for it( so much win for the private suppliers)
    I guess AAP was right about media being biased and paid. If media won't have been biased and paid then we would have seen this dumb a&&ry on t.v
     
    Last edited: Feb 5, 2014
  16. Singh

    Singh Phat Cat Administrator

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    Kejriwal told the Distcoms, ensure supply or get out.

    ===

    And regarding the 5 points raised in another post, all are valid re: Kejriwal's stance.

    1. Why has power been hiked before CAG audit ? Why wasn't Govt intimidated previously ?
    2. 50% reduction made sense because by spending 62 crores you are getting returns of 201 crores + BJP-Cong were pwnd.
    3. Asinine interpretation of the law.
    4. DERC is an independent body. If it has stolen 11000 crores that it let be answerable. Let BSES file a case against it.
    Delhi Govt is right in asking for cancellation of license. Delhi Govt is not involved.
    5. Reliance Cos are notorious for avoiding CAG audits and even more reputed for only going for profit based sectors.
     
    Last edited by a moderator: May 10, 2015
  17. fallenwarrior

    fallenwarrior Regular Member

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  18. Ray

    Ray The Chairman Defence Professionals Moderator

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    What I have to do with the Delhi Govt to file an RTI?

    My name is not Kejriwal that I have to clean the world.

    Nor a new Christ come to save the World!

    ===


    To be frank, I get mortified with figures.

    I like things simple.

    Keep the maths balanced and not complicated.

    If something has to be paid for, it has to be paid for, be it by A or by B.

    If the State has to pay, then it is from the exchequer. This much I understand that if it is not budgeted, then it will be paid at the expense of something else. In the long run, some essential project will suffer and be rolled over to the next Budget. The other option is to increase tax so that the shortfall is made up.

    Envy?

    Whatever for?

    ===


    Delhi has itself been bailed out by the Nation many a time.

    That is not the answer.

    ==


    So, said many of my seniors too.

    Welcome to the Dislike SKR club! 
     
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  19. feathers

    feathers Tihar Jail Banned

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    If BSES license is revoked if power supply is stopped then who will supply power, another private company or electricity board will goes back under direct Government control ?
     
  20. feathers

    feathers Tihar Jail Banned

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    Kejriwal attacks Anil Ambani on power controversy

    New Delhi: With the confrontation on power issue intensifying, Chief Minister Arvind Kejriwal today attacked ADAG chairman Anil Ambani whose group operates two power distribution companies in the city.

    "Anil Ambani playing politics wid delhi's electricity? Whose politics is he doing?," Kejriwal said in a tweet.

    Reliance Infrastructure spokesperson reacted strongly to Kejriwal's comment, saying "Reliance Group is extremely disappointed with the Delhi Chief Minister's tweet attacking our Group Chairman."

    The BSES discoms, which are run by Reliance Infra, urged Delhi Government to "engage constructively" to find a solution to the power crisis and avoid "extreme hardship" to Delhi citizens from next week.

    Delhi government yesterday had recommended to DERC to revoke the license of BSES discoms if they they fail to pay dues to NTPC and resort to long outages in large parts of the city from February 10.

    "Bulk power purchase costs have increased around 300 per cent in the past 12 years, while consumer tariffs have increased only 70 per cent in the same period. DERC needs to provide cost reflective tariffs to cover this increase in power purchase costs, and recover past dues of Rs over 15,000 crores from consumers," Reliance Infra said.
    about this ad

    "Delhi government can resolve the immediate payment crisis by providing support to Delhi Discoms to make payment to NTPC, against the security of these huge past under-recoveries, that have led to creation of Regulatory Assets of over Rs 15,000 crores," it said.
     
  21. Singh

    Singh Phat Cat Administrator

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    51% of BSES Rajdhani and Yamuna are owned by Delhi Govt.
     
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