
Lalit Jalan,Chairman,BSES Delhi
The past few years have witnessed
an abnormal rise in power purchase cost, close to 280 percent, against a mere
rise of 36 percent in retail tariff, thus leading to an under recovery of
revenue of around Rs 13,000 crore by the end of FY 2012.
This situation has arisen entirely
because of substantial increase in the power purchase costs coupled with the
complete absence of a cost reflective tariff regime at the distribution level.
Due to this huge discrepancy between cost and revenue, there
is a current revenue deficit of nearly Rs. 2 per unit which results in
under-recoveries of Rs. 20 crore per day for the all three Delhi Discoms.
DERC (Delhi Electricity Regulatory
Commission) recognised this acute crisis only much later when they allowed the
increased tariff and introduced Fuel Price Adjustment (FPA) besides recognising
the revenue gap which is yet to be passed on to the consumers.
In spite of the above measures the
current year tariff levels are not cost reflective leaving an un-recovered
revenue gap of Rs. 4,000 crore.
After the recent tariff hike our
current revenue is Rs. 750 crore per month and our current borrowing from PSU
banks stands at Rs. 6,500 crore. In addition to this, outstanding dues to
creditors are to the tune of Rs. 3,000 crore hence creating a total liability of
close to Rs. 9,500 crore as of Dec 31, 2011.
As a measure for
complete recovery from this situation, the future availability of
cost-reflective tariff and Power Purchase Adjustment formula is required at the
earliest. We are in the process of filing our Annual Revenue Requirement (ARR)
with DERC for next year tariff, as a step to overcome this situation.

Sunil Wadhwa,Managing Director,Tata Power Delhi Distribution Limited (formerly known as North Delhi Power Limited)
We have
requested an additional equity infusion by both the promoters of Tata Power
Delhi Distribution -Delhi government and Tata Power -for which the amount will
be decided in our next board meeting scheduled for February 3, 2012. The need to
inject equity was felt in order to meet the widening regulatory gap arising out
of low tariffs and an increasing cost of power supply. Though the power tariff
was recently hiked by 22 percent in the Capital yet even the regulatory
commission acknowledged the increase was only half of what was actually required
- a gap which they have promised to cover in the next tariff order.
We have been financing our regulatory gaps with borrowings but our loans have
increased substantially compared to the equity. The reason that we have not
defaulted on our payments to the power producers is because we have followed a
strategy of a mix of short term and long term loans. If you finance all your
regulatory gaps through short term loans the repayment period will come up early
and it might happen that the total cost might not have been fully recovered
through tariff collection. Since we contemplated that it will take longer to
cover these gaps we thought of financing through long term loans thus deferring
the repayment over a longer period.
Also, our gaps
are much lower than both the BSES companies, owing to a faster reduction of AT&C
losses. Though our service areas are equally tough in terms of population
concentration like Jahangirpuri, Sultanpuri, Bawana, Narela, Sabzi Mandi and
slums apart from industries, we have reduced more than our specified targets. As
a result of our continuous efforts not only have we not defaulted on our
payments but we have also declared dividend and paid bonus.
However this
does not mean that it has been cost effective for us but that we have organised
loans on a timely basis with proper structuring of tenures.
The promoter's
financial help is going to bring in huge relief to our company. The problem with
BSES's approach is that they should have done it on a timely basis before the
situation reached this gridlock. If you default first and then go for equity
infusion there are all the chances of it appearing as a bailout package rather
than what it is - an equity infusion.
We will be using
this equity infusion for lowering our debt rating and the regulatory gap.

P D Sudhakar,Chairman,Delhi Electricity Regulatory Commission (DERC)
Discoms are
companies formed under the Companies Act and the promoters of these companies
are free to bring in equity if and when they wish to. The BSES companies were
facing financial problem and they urgently required fund infusion either in the
form of equity or loans to meet their outstanding dues.
As far as we are
concerned, we asked them to maintain proper power supply and for which they
required funds to pay to their suppliers. We did issue a show cause notice to
BSES asking them to explain their plan for paying their dues and maintaining an
uninterrupted power supply. At that point, they had huge outstanding dues and no
funds available to make the required payment.
The proceedings
on the notice are still continuing so I cannot pass a judgement on this but they
have submitted a plan explaining how they plan to meet their outstanding dues.
This plan is based on the loans they will secure from IDBI-led consortium.