Tata may reject Mumbai supply order on R-Infra
The courts might again have to rule on the power supply standoff in this city between Tata Power and Reliance Infrastructure, with the former saying it might reject the state government order to maintain the existing arrangement for a specified period.
A Tata Power spokesperson was reported to have said that the company was “studying the government memorandum”. But the company may not be able to comply with the government directive to supply power to Reliance Infrastructure. The government last week had issued a directive asking Tata to continue supplying power to R-Infra. The order said Tata would have to continue supplying 460 Mw of power to R-Infra till June, at the regulated price of Rs 4.40 a unit “in the larger interest of consumers”. Then, from July till March 2011, Tata would have to supply 200 Mw to R-Infra at the same regulated price.
The matter had earlier gone to court and Tata Power got a favourable ruling, on its decision that it wished to stop supplying electricity to its rival. However, the state government then intervened. A committee chaired by the chief secretary gave a report and a committee of the Cabinet, chaired by the Chief Minister, issued an order last week on this basis. From April 2011, both could make new arrangements.
In addition, Tata was told that any surplus power it had could not be sold in the market; it would have to be offered at the regulated rate, first to its consumers and for the needs of the city’s municipal corporation and then to R-Infra. The rate has been set by the Maharashtra Electricity Regulatory Commission.
Tata’s case all along has been that its own consumers and their demand for power had been rapidly growing and it no longer had spare supply for R-Infra. The latter had told the government that if Tata stopped supplying it, it would have no option but to buy from the market at a much higher price, which meant it should be able to pass on the higher cost to its consumers in the city.
The state cabinet had also asked MERC to work out a mechanism to ensure richer customers do not migrate from one city supplier to another at the cost of lower-end customers, by working out an appropriate cross-subsidy mechanism.
There have been charges from R-Infra that Tata was “cherry picking” its highend consumers, while turning away the others, and then using this to say it could not spare power for Reliance.
Tata said this was untrue and bulk customers preferred its lower rates.
The government is concerned because a migration of high-end customers would mean a loss of the ability to support the lower rates billed for low-end customers, whose numbers are plentiful. – Business Standard
Leave your response!