Tata trips over RInfra wires
Suburban electricity consumers may no longer be able to switch over to Tata Power Company (TPC) from Reliance Infrastructure (RInfra).business Updated: Aug 18, 2011 01:29 IST
Suburban electricity consumers may no longer be able to switch over to Tata Power Company (TPC) from Reliance Infrastructure (RInfra). RInfra has decided to deny TPC its suburban network to service consumers who migrate to the network.
Lalit Jalan, RInfra's chief executive officer, made his company's intentions clear on Wednesday, a day after the state regulator officially granted Rinfra distribution licence for the next 25 years.
"We have no problem with migration, but it is not mandatory for us to let Tata use our network for migrated consumers. Tata has failed to lay its own network in the suburban area three years after it was told to do so," said Jalan.
The two companies have been at loggerheads ever since Tata, the bulk supplier till 2008, started servicing retail consumers and lured RInfra user with rates which were almost 40% lower. Currently, about 1.6 lakh Tata consumers use RInfra's network by paying wheeling charges while 5,000 consumers use Tata’s lines.
Justifying his stand, Jalan said that the Maharashtra Electricity Regulatory Commission (MERC) and the Supreme Court had asked Tata to lay its own network in its licenced area (island city and suburbs). He also cited the Solicitor General of India's (SGI) recent opinion that as per the Electricity Act, 2003, the distribution licensee should supply through his own distribution system. In Mumbai, an expenditure of Rs15,000-20,000 crore will be needed for laying a new network. RInfra was confident that the migrated consumers would gradually come back to them. "Our rates will reduce soon because our cost of power purchase will reduce," said Jalan.
It may be recalled that the SGI's opinion made the MERC scrap the four bids for suburban power distribution license from August 16 in favour of RInfa because it was the only bidder to have its own network. TPC will bid for the licence when it expires after two years.
TPC responded with a statement that read: "RInfra has challenged the regulatory provision made for the changeover customers and we would not like to comment on this any further. We look forward to clarity from MERC on the subject."
TPC added that it was building modern network progressively to service their consumers with robustness and better reliability than perhaps being presently experienced by changeover customers.
MERC chairman VP Raja did not comment. Consumer representative Sandeep Ohri said that as per the Supreme Court order, Tata can use RInfra's network till its licence expires.