Delhi government moves to scrap power distribution licences

NEW DELHI Tue Feb 4, 2014 2:26am EST

NEW DELHI Feb 4 (Reuters) - The government of India's capital, Delhi, has asked the region's power regulator to scrap the licences of electricity distribution companies if they fail to supply power to the city.

The request is the latest muscle-flexing between the newly elected Aam Aadmi Party, which leads the government in Delhi, and two power distribution companies, BSES Yamuna Power Ltd and BSES Rajdhani Power Ltd, run by billionaire Anil Ambani's Reliance Infrastructure Ltd.

It comes two days after state-run power producer NTPC Ltd said BSES Yamuna Power, which sells electricity in the central and eastern parts of the city of about 16 million people, must clear its dues or else supplies would be cut from Feb. 11.

The row could result in an outage of up to 10 hours a day, exacerbating the problems of Delhi Chief Minister Arvind Kejriwal, elected in part on a promise of cutting electricity tariffs for millions of Delhi's voters.

Citing lower tariffs and a shortfall in revenues, BSES Yamuna Power has already expressed its inability to pay state-run power generation companies.

Delhi's power secretary, Puneet Goel, said in a letter to the power regulator on Monday that if the distribution companies continued their stand, the regulator "may not have an alternative but to suspend their licences immediately".

"Extensive blackouts in the capital city of the country due to financial difficulties of the these two (companies) is not acceptable," Goel said in the letter.

In the event of the licences being revoked, "suitable officers" would be appointed to administer the distribution companies and keep power switched on, Goel said.

The companies said the matter had not been discussed in board meetings.

"We are deeply committed to the consumers of Delhi, and have served them for over 10 years and reduced power losses to the tune of nearly 35,000 crores rupees (350 billion rupees) which have accrued as savings to Delhi Govt," a spokesman for BSES Yamuna said in a statement.

Reliance Infrastructure runs the distribution companies, with the Delhi government holding a 49 percent stake.

Kejriwal, a former anti-corruption activist, in December asked the state auditor to look into the accounts of power distribution companies to see if they were profiteering. The companies have challenged the move in court. (Reporting By Sruthi Gottipati and Devidutta Tripathy; Editing by Angus MacSwan)