Tata, RInfra tussle puts state in a spot | mumbai | Hindustan Times
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Tata, RInfra tussle puts state in a spot

mumbai Updated: Apr 15, 2010 00:59 IST
Dharmendra Jore

Even as Reliance Infrastructure (RInfra) and Tata Power Company (TPC) fight for a dominant position in Mumbai’s power sector, the state is in a peculiar situation.

Following RInfra’s allegations that TPC had made it difficult for it to do business in Mumbai, the state finds itself in an embarrassing position because it had backed TPC in the past.

It is now thinking of options that can save consumers’ money and ensure uninterrupted supply.

A senior Mantralaya official said the best way to resolve the crisis was to ask TPC to continue its 500 mega watts (MW) supply to RInfra so that it keeps the tariff low. “Other options could be do give a direct subsidy to Reliance,” he said requesting anonymity.

Energy Minister, Ajit Pawar, was unavailable for comment. Company officials refused to comment.

Rising temperatures, changing lifestyles and the rise in commercial activities will raise demand by 23 per cent, nudging it past 3,000 megawatts (MW) a day. However, supply is likely to remain at 2,400 MW only.

If RInfra is forced to buy power from elsewhere to plug the shortfall, it will have to spend an additional Rs 600-Rs 700 crore this summer. This burden will be passed to consumers.

Consumer rights activist, Sandeep Ohri, said, “The state has asked TPC to continue supply to RInfra, but TPC is likely to oppose the directive because it will hamper its constitutional right to business.” A government official said TPC has two orders from the Supreme Court that allow it to discontinue supply to RInfra and use that power to expand its own retail business. “Even a regulator cannot direct a generation company to continue supply because of legal problems,” the official said.

RInfra, on the other hand, has cautioned in a letter to the state that a selective consumer migration to TPC will mean the loss of the cross subsidy of

Rs 1,000 crore will be passed on to low-end consumers.