DERC to gift Rs 8,000 cr to discoms, burden you
12 March 2014 6:07 AM IST
The Appellate Tribunal of Electricity (APTEL) has recently directed Delhi Electricity Regulatory Commission (DERC) to take an early decision sanctioning liquidation of the huge accumulated arrears owed by the Delhi discoms. In all likelihood, it means DERC is about to hike power tariffs, instead of reducing them, as promised by the former government.
According to sources, APTEL claims financial restructuring of BSES and Tata Power discoms would help make their business sustainable with minimum burden placed on the consumers. Yet DERC, last week, proposed a roadmap for payment of Rs 8,000 crore in the interest of the three discoms, including the two Reliance-owned BSES companies and Tata Power. In other words, the regulator is planning to increase power tariff in order to collect the amount, thereby considerably burdening the consumers and favouring the private discoms.
Welcoming the APTEL directive, Delhi discoms have expressed relief. ‘It is a very progressive step by the Regulator. It sets a benchmark or baseline and provides a roadmap for treatment of regulatory assets and its liquidation in future based on the true break-up of accounts and capitalisation of investment. Any future accrual of Regulatory asset can be accordingly on the same principles. It will give comfort to the lenders and banks to fund further working capital and project,’ said Tata Power.
Till financial year 2011-12, the provisional revenue gap approved by DERC was Rs 5,206 crore for BRPL, Rs 2,855 crore for BYPL and Rs 3,371 crore for Tata Power, which may or may not vary according to the findings of the ongoing CAG audit. DERC has announced eight annual installments to cover the deficit, which according to industry sources, might translate into a tariff hike every year.
Former chief minister Arvind Kejriwal had alleged that BSES had artificially inflated its equipment expenses worth Rs 1,428 crore between 2004 and 2006 from its sister concern Reliance Energy Limited (REL), when the equipment was actually worth Rs 880 crore. However, according to APTEL directive, DERC shall again take up the matter with Delhi government for early decision on the financial restructuring of the discoms to ‘minimise the burden on the consumers on account of increase in retail supply tariff due to liquidation of the regulatory assets.’
According to sources, APTEL claims financial restructuring of BSES and Tata Power discoms would help make their business sustainable with minimum burden placed on the consumers. Yet DERC, last week, proposed a roadmap for payment of Rs 8,000 crore in the interest of the three discoms, including the two Reliance-owned BSES companies and Tata Power. In other words, the regulator is planning to increase power tariff in order to collect the amount, thereby considerably burdening the consumers and favouring the private discoms.
Welcoming the APTEL directive, Delhi discoms have expressed relief. ‘It is a very progressive step by the Regulator. It sets a benchmark or baseline and provides a roadmap for treatment of regulatory assets and its liquidation in future based on the true break-up of accounts and capitalisation of investment. Any future accrual of Regulatory asset can be accordingly on the same principles. It will give comfort to the lenders and banks to fund further working capital and project,’ said Tata Power.
Till financial year 2011-12, the provisional revenue gap approved by DERC was Rs 5,206 crore for BRPL, Rs 2,855 crore for BYPL and Rs 3,371 crore for Tata Power, which may or may not vary according to the findings of the ongoing CAG audit. DERC has announced eight annual installments to cover the deficit, which according to industry sources, might translate into a tariff hike every year.
Former chief minister Arvind Kejriwal had alleged that BSES had artificially inflated its equipment expenses worth Rs 1,428 crore between 2004 and 2006 from its sister concern Reliance Energy Limited (REL), when the equipment was actually worth Rs 880 crore. However, according to APTEL directive, DERC shall again take up the matter with Delhi government for early decision on the financial restructuring of the discoms to ‘minimise the burden on the consumers on account of increase in retail supply tariff due to liquidation of the regulatory assets.’
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