Category: Distribution

January 29, 2016

Research in social science has shown that a high level of social trust provides a booster shot for economic growth.When placed in this context,the recalcitrant approach of Delhi’s private power distribution companies in getting their books audited by CAG is both inexplicable and unwelcome.Arvind Kejriwal’s government regarded power distribution companies with distrust and it helped no one.Kejriwal may have left but the issues he raised remain.There is no independent audit of companies’ cost,a prime factor in calculating tariffs.It is in everyone’s best interest that they submit themselves to such an audit.Companies are reluctant to get their books audited as they feel CAG’s remit does not cover firms under majority private control.But even Delhi’s electricity regulator feels companies should get their costs independently audited by CAG,to eliminate the possibility of cost padding.The primary problem is that India does not have a free market in electricity.There is no free entry, exit or pricing.Governments and regulators fix everything from cost of inputs such as gas and coal, to price of electricity paid by consumers.Typically, at every stage pricing decisions try to cover the cost of operation and provide a return on investment. This provides plenty of incentive for showing higher costs than actually incurred.Reforms in India’s power sector can

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January 17, 2016

The Comptroller and Auditor General (CAG) ,while justifying its stand on auditing the accounts of the three discoms, Anil Ambani owned BRPL and BYPL and the Tata-owned NDPL,said that the three private power distribution companies (discoms) in Delhi  enjoyed funding of more than Rs 5,000 crore from the Delhi government since their inception on July 1, 2002. The three discoms are joint ventures between these private companies and the Delhi government. In each of the discoms, the Delhi government has 49% stake while the private entities have 51% each.

 

CAG said in its petition before the Supreme Court challenging the Delhi High Court order quashing the federal audit of discoms “Considering that the discoms enjoyed funding of more than Rs 5,000 crore from the state by way of equity, debt, transferred assets and also receivables, there is a nexus with the consolidated fund of the state, and hence the CAG has a statutory duty to scrutinize the books of accounts of discoms. There were huge discrepancies in the discoms’ accounts and the state government’s decision in seeking an audit of their books was not unjustified”.

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January 16, 2016

The Supreme Court has sought responses from three private power distribution companies on petitions filed by various bodies including the Delhi government challenging a High Court order that these discoms cannot be audited by the Comptroller and Auditor General(CAG) of India.
A bench headed by Justice J Chelamswar asked the three discoms — Tata Power Delhi Distribution Ltd (TPDDL), BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd — to file their responses within four weeks and listed the matter for final hearing on March 2.

The bench was hearing appeals filed by Delhi government, CAG and NGO United RWAs Joint Action (URJA) against the Delhi High Court’s decision that these discoms cannot be audited by the CAG as they are already under the jurisdictional authority of Delhi Electricity Regulatory Commission (DERC).

The Delhi High Court in its verdict had quashed the AAP government’s January 7, 2014 directive to carry out an audit of the three discoms by the CAG.

The Delhi government had ordered the CAG audit of the three discoms which supply power in Delhi, on grounds including that it has 49% stake in the discoms.

The high court, in its October 30, 2015 order, had termed as “populist” the decisio

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October 30, 2015

The Delhi High Court today quashed the AAP government’s decision to get the accounts of three private power distribution companies audited by the Comptroller and Auditor General (CAG). “We have allowed the petitions of the discoms,” a bench of Chief Justice G Rohini and Justice R S Endlaw said while clarifying that the entire audit process carries out so far as well as the draft report of the CAG would be “non-est” and would have no bearing any more. 

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October 26, 2015

The Uttar Pradesh Electricity Regulatory Commission (UPERC) has slapped a fine of Rs 50,000 on the managing director (MD) of Purvanchal Vidyut Vitran Nigam Limited, the distribution company of eastern Uttar Pradesh for not being able to reduce line losses despite the regulatory commission’s orders.

Apart from the MD, the commission also slapped a fine of Rs 20,000 on the director (Commercial) and R10,000 each on four chief engineers of the discom. The chief engineers under the commission’s scanner were those from Azamgarh, Varanasi, Mirzapur and Gorakhpur.

The commission has asked the officials to deposit the fine within a week.

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October 26, 2015

North Delhi power supplier Tata Power Delhi is using power banking arrangements extensively, a factor which the discom claims has helped them save up to Rs 200 crore. According to the discom, the savings are from the period between October 2014 and March 2015, in which the utility exported approximately 400 million units of power which it got back in the summer months from May 2015 to September 2015. At an average cost of Rs 5/unit, the discom said that the financial expenditure for buying this power would have been around Rs 200 crore. The utility further said that it had made more such banking arrangements to save power.
In addition to this, the discom has also written to the Delhi government for continuing the reallocation of several NTPC and Delhi government power stations because they were costly and defeated the whole purpose of reducing cost of power in the capital. 

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October 15, 2015

A proposal to provide permanent solution to issues of debt-ridden power distribution companies will be put before the Union Cabinet “very soon”, Power Minister Piyush Goyal said today.

Hit by subsidised tariffs, state electricity discoms are facing cash crunch and are incurring annual losses of about Rs 60,000 crore. This is also affecting public sector banks as their bad loans are rising.

About the banks’ readiness to take a hit by lower interest rate for these discoms, Goyal said, “I can assure you that every bank has hailed the innovative way in which a permanent resolution to the discom problems has been worked out. Banks are delighted at the entire proposal.”

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October 14, 2015

NEW DELHI: Competition watchdog CCI has dismissed a complaint against seven power distribution companies across the National Capital, Punjab, Haryana and Himachal Pradesh, saying issues related to Open Access to electricity are to be decided by respective state regulators. The allegations were made against seven discoms, including three from the National Capital — Tata Power Delhi Distribution Ltd, BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd. Others are Punjab State Power Corporation Ltd, Uttar Haryana Bijli Vitran Nigam Ltd, Dakshin Haryana Bijli Vitran Nigam Ltd and Himachal Pradesh State Electricity Board Ltd.

The complaint was filed by the Open Access Users Association where it was also alleged that the discoms have unduly influenced and made unreasonable suggestions to their respective State Electricity Regulatory Commissions in order to increase various charges for Open Access. Noting that there is no competition issue involved in the factual matrix disclosed in the information, CCI said the “present case is essentially related to the regulatory functions discharged by the State Regulatory Commissions in respect of fixation of tariffs”.  Under the Electricity Act, open access refers to non- discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system

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October 14, 2015

NEW DELHI: The issue of burgeoning debt of power distribution companies will be sorted out soon as everybody is on board to resolve it, Power Minister Piyush Goyal said today.

“Everybody is on board that discoms (issues) are going to be sorted out soon,” Goyal said after many rounds of meetings with distribution companies and bankers here in the Capital. Hit by subsidised tariffs, state electricity discoms are facing cash crunch and are incurring annual losses of about Rs 60,000 crore. This is also affecting public sector banks as their bad loans are rising.
The Centre is working on recast debt of power distribution companies and a proposal in this regard is expected to be tabled before the Union Cabinet this month. The government wants to draw a long lasting financial restructuring plan that would provide incentives to discoms to generate more revenue.

“Under the debt recast plan, the discoms will get some relief by way of reducing interest rate. That could be reduced from 11-12 per cent to 7-8 per cent. Besides the repayment tenure could be stretched,” a senior official of discom who attended the meeting today said. The Union Cabinet is expected to soon consider a proposal to recast over Rs 3 lakh crore loans of power distribution companies with a view to bring down their liabilities.

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October 14, 2015

NEW DELHI: The government is set to clear a mega debt restructuring next week for nine state power distribution companies as part of an exercise to reviatilise the sector and clean-up bank balance sheets. Sources said the total loans would add up to nearly Rs 4.3 lakh crore with states such as Telangana, Rajasthan, Uttar Pradesh, Jharkhand, MP and Tamil Nadu expected to be major beneficiaries once the cabinet approves the plan on Wednesday. As the loans would be taken over by states and backed by sovereign guarantees, discoms would be able to raise cheaper funds — at around 8-9%, compared to 13-14% that they are currently paying.

With fresh loans at lower rates, the companies would be able to meet their payment obligations more comfortably, said sources. The move is also critical for the power sector as bankrupt state utilities are unable to meet the demand and power generation capacity is going waste. With demand from state electricity boards remaining weak, generation units are operating at 55-60% of the installed capacity in a country, which is starved of power across most states.

The state utilities are also being asked to undertake major reform initiatives for accessing central funding as similar steps to nurse state electricity distributors had failed in the past, prompting the latest round of restructuring. For instance, stat

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