Black out or blackmail

It is the worst case of decision paralysis by authorities, including judiciary, to deal with Delhi’s daredevil Discoms – the city-state’s private power distribution companies operating under license from the local government. Instead of acting strongly against the Discoms for creating a spectre of long hours of possible power cut in the midst of the current hot summer, the authorities, namely the state government, electricity tariff regulator and the judiciary, seem to believe in taking a conciliatory position under a ‘blackout’ blackmail by those private retail distributors of electricity. A long phased blackout in the highly overpopulated national capital could lead to a massive public outburst the very thought of which may be scaring the authorities from acting logically or judiciously.

No one is sure in which direction and in what form the public would vent its ire against threatened long hours of power cut, scheduled or unscheduled, and its consequence upon both the national and state governments. The private discoms are clearly on top of the situation dictating terms on both the authorities and the public sector power producer-suppliers, to which they habitually run uncomfortably huge credits – especially, the two Anil Ambani group (ADAG) companies, BSES Rajdhani Power Limited (BRPL) and BSES Yamuna Power Ltd (BYPL). The public sector NTPC, a key-producer-supplier of electricity to Delhi discoms, had taken the help of judiciary to recover dues of nearly Rs. 900 crore from the two ADAG companies. The Supreme Court has extended the deadline for payment of dues (Rs 788 crore) to NTPC by the Ambani discoms to 31 May.

Going by the reports since Aam Aadmi Party’s (AAP) short-lived Delhi government took a series of measures, including making the CAG agree to accept a mandate to conduct cost audit of the discoms to ascertain their financials and unfold the secrecy surrounding pricing of electricity for retail consumers at a disproportionately higher rate than what they agreed to pay to electricity producer-suppliers, to discipline those discoms and provide relief to the city’s large low-income population or Aam Aadmi, the discoms have so far succeeded in keeping all its business challengers at bay by simply dangling the ‘blackout’ threat. They are going ahead with higher power tariff, creating roadblock to CAG audit, some like ADAG drawing bulk power from producers without clearing their payment dues and dishing out wrong assurances before the authorities. It would appear that their corporate strategy is sensitised around a possible power blackout spectre is in full play and, so far, successful as well. In February, the Ambani Discoms had warned that if NTPC pulls the plug, South Delhi could have 50 per cent power cut.

The most unfortunate part of the seemingly dirty discom strategy and the sheepish response from the authorities, especially from the government, that they are indirectly jeopardizing the interest of the entire nation to keep the private discoms and the Delhi public happy at the cost of financial health of power producers and end consumers across the country. At least, one expected the judiciary to give a clear direction to the discoms, which are running huge arrears of payment with the bulk suppliers of electricity, to settle the dues immediately or surrender their distribution licence and also force them to open their books of account for inspection by CAG. The government could confiscate all their assets leveling criminal charges of raising ransom in the form of a scare against the society. Instead, the judiciary asked the discoms and their unpaid bulk electricity suppliers such as NTPC in February to settle the arrears issue mutually and amicably within a time frame which the discoms failed to honour. The extension of the deadline helped only the defaulted discoms and not the power producers.

Every megawatt of electricity the discoms buy from its producer-suppliers are sold immediately to retail consumers who are normally obliged to clear their monthly electricity bills within the due date. The latter are penalised if payments are made after the date. Then, why are the discoms allowed to hold back their suppliers’ payments? No company can run its operation normally if with such large unrecovered bills as Rs 880 crore from a single group. The point that needs to be noted is that NTPC is a national company and India’s single largest power generator and supplier, providing electricity to every parts of the country. The company is into business, not charity. The company has to pay large sums to its suppliers of raw materials such coal and natural gas, both of which are in short supply. The latter would choke the supplies if NTPC makes large payment defaults. Borrowing high cost funds from the market to cover the losses on account of its own creditors does not make business sense. Such a practice will further weaken NTPC’s financial health risking a cascading impact on availability of electricity in other parts of the country.

Unfortunately, a very rich and powerful section of Delhiites have long considered Delhi as equivalent of the rest of the country. Delhi’s wellbeing, Delhi’s wealth, Delhi’s civic infrastructure and Delhi’s lifestyle are primary concerns of all the Delhi-based central authorities, to whom the rest of the country comes the next or far next. It is this Delhi-centric sentiment that made the central government get most of its key enterprises such as ONGC, Indian Oil, NTPC, Steel Authority (SAIL), Gas Authority (GAIL), NHPC, National Highway Authority, International Airport Authority (IAAI), Container Corporation, etc. headquartered in Delhi and not at their respective places of action to ensure its full grip over the management of these corporations with an eye to bolster Delhi’s importance.

It is this Delhi-centric design that made the authorities set up power plants in Uttar Pradesh and Rajasthan in the 1980s to ensure uninterrupted power supplies to the nation’s capital while most parts of Uttar Pradesh and Rajasthan are made to starve of electricity for four to eight hours even now.  This ‘Delhi first’ attitude explains why the central electricity regulatory commission, the national and Delhi governments and even Judiciary hesitate to stand up to the discom blackmail and take appropriate action to discipline the important public utility sector even if it means temporary suffering of Delhiites during this hot summer. The discom blackmail has put the entire government machinery to shame. It also raises the question of ‘virtue’ of privatisation of this important utility sector. IPA