Utility warns of power cuts in India's capital after tariff cut

MUMBAI Fri Jan 31, 2014 7:32am EST

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MUMBAI Jan 31 (Reuters) - An electricity distribution company in India's capital New Delhi has warned the local government of possible power cuts in some parts of the city because it is unable to pay for electricity supplied by state generation companies.

The warning comes weeks after Delhi's newly elected Aam Aadmi (Common Man) Party government slashed water and power tariffs for lower-usage residential consumers and said it would conduct audits on the city's three private-sector power distribution companies.

BSES Yamuna Power Ltd, which supplies electricity in the eastern and central parts of the city, told the government in a letter on Jan. 25 that there could be power cuts of up to 10 hours a day because it had no funds to pay state generation and transmission companies.

A summary of the letter was seen by Reuters.

The company, a subsidiary of Reliance Infrastructure Ltd , also said that banks were reluctant to extend additional credit or provide flexibility in repayments because of inadequate tariffs and a shortfall in its revenue.

A spokeswoman at state-owned NTPC, which supplies most of the power to Delhi's distribution companies, declined to comment.

"There's going to be no cuts. These power companies are being mischievous and creating panic," Delhi Chief Minister Arvind Kejriwal told a news conference on Friday and warned the firms of a possible cancellation of licences. (Reporting by Prashant Mehra; Additional reporting by Sruthi Gottipati in New Delhi; Editing by Anupama Dwivedi)

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