Court tells NTPC to keep up Delhi power supply during payment row

NEW DELHI, March 26 Wed Mar 26, 2014 8:28am EDT

NEW DELHI, March 26 (Reuters) - India's Supreme Court on Wednesday told producer NTPC Ltd to continue supplying power to New Delhi while it waits for money it is owed by a distribution company, avoiding a possible blackout in the country's capital.

In an escalating battle over who should shoulder the rising cost of power in the city, distribution companies have said they cannot pay the money they owe while electricity tariffs are kept low and they suffer revenue shortfalls.

State-run NTPC had threatened in February to cut off power supply to BSES Yamuna Power, one of the three distributors in Delhi, if the company did not pay its bill.

But the Supreme Court reiterated that NTPC must maintain power supply even while it is owed money, and ordered BSES, part of billionaire Anil Ambani's Reliance Infrastructure Ltd , to pay the dues it owes since Jan. 1, 2014. It did not specify the amount BSES must pay.

India's power sector, hobbled by rising debts and fuel supply shortages, has struggled to increase output to meet rising demand. Blackouts are common, hurting Asia's third-largest economy.

The case in Delhi reflects a growing demand in India, where many consider cheap or free power to be a right and not a privilege, for electricity tariffs to be kept low.

An anti-graft party claimed a surprise victory in Delhi state elections last year, partly on the back of promises to lower tariffs for voters.

But pressure to keep prices low makes it tough for distributors to force through tariff rises they say are necessary to keep pace with the increase in the cost of power.

The three distributors in Delhi say they face a revenue loss, built up over years of operations, totalling more than 150 billion rupees ($2.4 billion).

The Supreme Court said that over coming weeks it will seek information from the Delhi Electricity Regulatory Commission and BSES on how to resolve the revenue shortfall, and asked the commission to ensure there is no unnecessary delay in paying the gap. (Reporting by Suchitra Mohanty; Writing by Tommy Wilkes; Editing by Anthony Barker)