Prepare to pay for govt’s bad power deal

Two-thirds of Delhi could soon pay for someone else’s boo-boo. Power distributor BSES wants to raise tariffs in its areas to make up for losses, reports Moushumi Das Gupta.

Two-thirds of Delhi could soon pay for someone else’s boo-boo. Power distributor BSES wants to raise tariffs in its areas to make up for losses resulting from a poorly thought-out deal the Delhi government struck to procure power this summer.

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Last month, BSES asked Delhi Electricity Regulatory Commission (DERC) for permission to charge more. The watchdog will decide on the petition by the middle of July.

“BSES has submitted a petition seeking an interim tariff hike. We have conducted a hearing and will take a decision in a fortnight. The distcoms have said they are facing a cash crunch because of the costly power that they have procured,” DERC chief Berjinder Singh said.

BSES supplies to east, south, west and central Delhi through BSES Yamuna and BSES Rajdhani. It wants the interim hike before the scheduled fixing of tariffs for the next four years in December. It has argued that it is losing Rs 116 crore every month on account of a decision the Delhi Power Procurement Group (DPPG) — a body formed by the government to help distcoms procure power — took in March this year. This is what happened.

As summer set in, DPPG, anticipating a severe power crisis, tied up with Himachal Pradesh for 450MW at Rs 7.29 per unit. The deal was for seven months from April to October, on a ‘take or pay’ basis, which meant the buyer agreed to pay the full amount even if it did not take the power.

But the anticipated crisis never came. There was surplus power, and the distcoms were forced to sell at huge loss. A DERC official explained: “Due to interlinking of grids, the frequency of grid has improved, and power is available to states at Rs 3-4 per unit. But the distcoms are paying Rs 7.29 per unit. Now the consumer will face the consequences of DPPG’s wrong decision.”

DERC had suggested an agreement with Himachal under which Delhi could give back 450 MW in winter. But Himachal refused. “They said the price was part of the contract and they can’t undo it,” power secretary Rakesh Mehta, who traveled to Shimla recently, said.

So, unless DERC manages some unlikely jugglery to adjust the losses, you will have to pay. Brace for the hit.