Private discoms in Delhi push for 8% tariff hike

While state-owned discoms are yet to sign up for the bailout package, private discoms operating in Delhi have sought to be taken on board the scheme. The Delhi discoms argue that they are reeling under debt due to regulatory overhang caused by a four-year tariff freeze.
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Feb 27, 2013, 01.30 PM | Source: CNBC-TV18

Private discoms in Delhi push for 8% tariff hike

While state-owned discoms are yet to sign up for the bailout package, private discoms operating in Delhi have sought to be taken on board the scheme. The Delhi discoms argue that they are reeling under debt due to regulatory overhang caused by a four-year tariff freeze.

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Private discoms in Delhi push for 8% tariff hike

While state-owned discoms are yet to sign up for the bailout package, private discoms operating in Delhi have sought to be taken on board the scheme. The Delhi discoms argue that they are reeling under debt due to regulatory overhang caused by a four-year tariff freeze.

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Sumit Jha (more)

Reporter, CNBC-TV18 |

While state-owned discoms are yet to sign up for the bailout package, private discoms operating in Delhi have sought to be taken on board the scheme. The Delhi discoms argue that they are reeling under debt due to regulatory overhang caused by a four-year tariff freeze. The three discoms have recently applied for a nearly 8% hike to the regulator, report Sumit Jha and Elan Dutta of CNBC-TV18.

The health of state discoms is often blamed on the freeze in tariffs caused by political interference, but the Delhi discoms - Reliance Infra and Tata Power - blame their poor financial health on the regulatory overhang. The discoms argue that a 8% hike will give them some leeway in managing debt. And even though the Delhi government has decided to infuse Rs 245 crore in Tata Power Delhi to ease liquidity concerns, the discoms are pushing for a steep hike.

Praveer Sinha, CEO, Tata Power Delhi Distribution, says that we have asked for graded hike in tariff. This will go a long way in reflecting true cost and help us deal with the regulatory overhang.

The Delhi discoms have been accused of fraudulent accounting in the recent past, a charge they deny. And while they seem to not be losing money on account of sales, they claim that the debt burden needs to be dealt with - through a bailout package just like the one offered to state-owned discoms. Power minister Jyotiraditya Scindia however refused to this demand.

Jyotiraditya Scindia, power minister, says that FRP has been approved only for state-owned discoms and cannot be extended to private entities.

Given this, it is clear that Delhi's discoms are pinning their hopes to tackle their Rs 20,000 crore debt burden via a steep tariff hike. But will that be allowed, especially in the run up to state elections? That's a question with no answers as yet.


 

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