New Delhi: Ahead of its stake sale, state-owned power producer NTPC Ltd is demanding the payment of Rs1,310.83 crore it is owed for electricity supplied to the National Capital before Delhi Vidyut Board (DVB) was created out of Delhi Electric Supply Undertaking (Desu) in 1997.
The money continues to be owed to NTPC, India’s largest power utility, even seven years after DVB itself ceased to exist, having been unbundled into six firms, including the Reliance-Anil Dhirubhai Ambani Group’s BSES Rajdhani Power Ltd, BSES Yamuna Power Ltd and Tata Power Co. Ltd’s North Delhi Power Ltd (NDPL).
The demand for the payment of the arrears precedes a follow-on public offer (FPO), or share sale, from which the government expects to raise Rs6,000 crore.
The company’s initial public offering of shares took place in October 2004.
“We want this due (settled) before our FPO. The government of India must do something. Once we get this due, our profitability will increase,” said R.S. Sharma, chairman and managing director of NTPC.
The cabinet committee on economic affairs has approved the disinvestment of 5% of paid-up equity capital of NTPC, in which the Union government owns 89.5%, with the rest being held by the public.
Private distribution firms maintain that the arrears due to NTPC is the responsibility of Delhi Power Co. Ltd (DPCL), the holding company of all unbundled firms. Delhi Transco Ltd and Indraprastha Power Generation Co. Ltd take care of power transmission and generation, respectively.
“We were given clean opening balance sheets,” an NDPL spokesperson said.
One of the key principles of the privatization of electricity distribution carried out by the Delhi government was that the past liabilities and losses of Desu and DVB cannot be passed on to successor entities, a BSES spokesperson said.
“All liabilities of Desu or DVB period were parked with the holding company DPCL,” the spokesperson said.
Delhi power secretary Rajendra Kumar had said in an email reply on 1 December that the director of DPCL would respond to queries on the issue, but no answers had been received until a fortnight later on Tuesday.
“The issue is with the government of India,” said a member of the Delhi Electricity Regulatory Commission.
“When the power was supplied by NTPC till 24 February 1997, Desu was a part of Municipal Corporation of Delhi, which was a body under the Union home ministry,” said the member, who didn’t want to be identified.
Analysts said that non-payment of the arrears wouldn’t make a difference to the financials of NTPC, which has a market value of Rs1.7 trillion and posted a net profit of Rs7,827.40 crore on revenue of Rs42,182.40 crore in the year ended March.
“Even if NTPC is not paid this due, the impact on the utility will be minimal given their huge market capitalization,” said Madanagopal R., an equity research analyst at Mumbai-based brokerage Centrum Broking Pvt. Ltd.
NTPC has an installed power generation capacity of 30,644MW and plans to raise it to 50,000MW by 2012.
Shares of NTPC rose 0.12% on the Bombay Stock Exchange to close at Rs208.20 on Tuesday, on a day the exchange’s benchmark stock index, the Sensex, declined 1.3% to close at 16,877.16 points.