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Reliance’s power transfer move leaves suburbanites fuming

india Updated: Aug 26, 2009 02:22 IST
Dharmendra Jore
Dharmendra Jore
Hindustan Times
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Do you live in the suburbs? If yes, will you end up paying more on electricity bills?

That’s what consumer activists are asking.

Activists have opposed a move by the Anil Ambani-led Reliance group, which wants to transfer suburban electricity distribution rights to its subsidiary firm, Reliance Energy.

They want to know if the shift will impact power tariffs, which are already higher than other utilities in the state.

Early this month, the firm put up the transfer request to the Maharashtra Electricity Regulatory Commission (MERC). This was objected to by activist Sandeep Ohri.

Accepting the submission, MERC has appointed Ohri as official intervener with another activist, Rakshpal Abrol.

The matter comes up for hearing next month, after which a decision is likely.

“A company is authorised to recover investments made in licenced business,” Ohri told Hindustan Times. “MERC will have to identify which assets are being used for the licenced business and will be transferred to the new company.”

Simply put, recovery of such investment could further hike power bills for suburban consumers who are already fighting Reliance Infrastructure’s (RInfra’s) inflated rates.

MERC has stayed the hike and instituted a probe into alleged irregularities in the firm.

RInfra runs its electricity business in the suburbs. Earlier, it was controlled by Reliance Energy. In 2008, the group changed its name to Reliance Infrastructure. The firm has revived REL and wants to hand over power distribution to it.

In 2003, the Reliance Group amended the Bombay Suburban Electric Supply to include other businesses such as real estate, direct-to-home satellite, cellular, etc, which are currently conducted by RInfra.

MERC sources confirmed the commission has asked RInfra to submit adequate replies to consumer queries. “If MERC approves the transfer, it is likely that some of the assets paid for by consumers are retained by RInfra and not transferred to REL,” said Ohri.

RInfra refused to comment.

Ohri said the firm might again ask MERC to approve recovery of the money it spent on creating new infrastructure for REL. “The MERC has also asked RInfra to prove if it has a valid licence.”