Aravali threatens to cut supply to BSES

Aravali threatens to cut supply to BSES

New Delhi: Aravali Power Co. Pvt. Ltd, a joint venture of India’s biggest power producer NTPC Ltd, has threatened to suspend power supply to two Reliance Group utilities that distribute electricity in Delhi starting Friday for not providing letters of credit (LCs).

Initially, Aravali Power plans to stop the supply of power to BSES Rajdhani Power Ltd (BRPL) and BSES Yamuna Power Ltd (BYPL) for three months if LCs—documents from a bank that guarantee payment—are not restored, according to the notices posted on NTPC’s website, threatening a blackout in east, west and south Delhi where the companies supply electricity to around 2.8 million consumers.

In addition, Aravali Power, a joint venture of NTPC, Indraprastha Power Generation Co. Ltd and Haryana Power Generation Co. Ltd, has encashed LCs provided by the two power distributors. A 27.46 crore LC was encashed because BRPL defaulted on payments, while a 17.16 crore LC was encashed for BYPL.

Out of 500 megawatts (MW) that Aravali Power generates, it supplies 166MW to the two distribution companies in Delhi.

According to the notices served by Aravali Power to BRPL and BYPL dated 30 September, outstanding amounts to be paid by the two firms are 12.62 crore and 7.9 crore, respectively.

A BSES spokesman confirmed that the company had received the notices from Aravali Power, but denied that any payments were due to the power generator.

“All current bills of Aravali Power have already been cleared and there are no overdue payments," the spokesman said in an emailed response to a query. “BSES is committed to paying all its dues, as it is to its 28 lakh consumers, and will make all efforts to ensure no inconvenience is caused to our customers."

The notices served to BRPL and BYPL state that if the utilities fail to “renew and maintain letter of credit, the supply of power shall remain suspended till 1.1.2012, after which APCPL (Aravali Power) shall have the right to terminate agreement as per PPA (power purchase agreement) provision with immediate effect by a communication in writing to BRPL".

In a separate development that may aggravate the power situation in Delhi, state-run NTPC has shut three units with a total capacity of 910MW because of a coal shortage at its Dadri plant that supplies power to Delhi.

This is not the first time that such notices have been sent to BRPL and BYPL. NTPC had earlier issued notices to the two companies stating it would discontinue power supply last month if 895 crore in dues weren’t paid.

However, the issue was resolved after the two power distributors gave a written assurance to NTPC that they would unconditionally restore the LC, clear the balance outstanding dues, and also undertake to pay arrears in six equal instalments before March 2012.

“While the other states are backed by RBI (Reserve Bank of India) bonds, in the case of Delhi, there is a tripartite agreement between NTPC, Delhi government and the distribution companies," said a senior NTPC executive, requesting anonymity.

Delhi had a maximum power demand of 3,600MW on Wednesday. The major reason the Capital continues to suffer from shortages is because only 1,382MW of capacity is installed at plants owned by the Delhi government or meant for it.

“There is a problem with the distribution companies overdrawing from the grid," said a Delhi government official, who didn’t want to be identified.