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Tata refuses power to Reliance

business Updated: Mar 24, 2010 01:08 IST
HT Correspondent

As the summer temperature continues to rise in Mumbai, suburban power consumers will have to brace themselves to pay more for electricity.

Tata Power Company (TPC) told the state government on Tuesday that its decision to stop the supply of 500 mega watts (MW) of power to suburban supplier, Reliance Infrastructure, from April 1 this year is legal.

TPC officials conveyed this to Chief Secretary, J. P. Dange, in the presence of officials from Reliance. Neither company was available for comments.

The TCP is expected to reiterate its stand when it meets a Cabinet sub-committee headed by the Chief Minister later this week. Representatives of Reliance Infrastructure have also been called to the meeting, which is likely to be held on March 26 or 27.

The meeting was held following Energy Minister Ajit Pawar’s assurance to the Legislative Assembly that the government will intervene to avoid a power deficit in the suburbs where over 26 lakh consumers may face a steep hike in tariff if Reliance spends Rs 600 to Rs 700 crore from sources other than TPC.

Power from Reliance costs more than any other utility in the state. Reliance asked the government to convince Tata so that consumers are not burdened further.

Reliance needs about 1,400 to 1,500 MW daily of which it generates 500 MW and buys the rest from other suppliers.

Tata supplies to bulk consumers and has recently started retailing in distribution areas of Reliance and Brihanmumbai Electric and Suburban Transport undertaking.

Reliance has been buying 500 MW of power from Tata at cheaper rates for several decades, but since it did not enter into an official power purchase agreement (PPA) with TPC, the Supreme Court ruled in Tata’s favour last year. Reliance had agreed to sign an unconditional PPA for 500 MW after the court verdict.

A senior government official told Hindustan Times on the condition of anonymity that TPC officials told government that it was Reliance that started an unnecessary legal battle.