Simultaneously, BSES has requested the Maharashtra State Electricity Board (MSEB) not to link the No Objection Certificate (NOC) for its Saphale power project under section 44 of Electricity Supply Act, 1948 and payment of standby charges to TEC. BSES has categorically said that MERC which regulates power procurement prices, would now determine the amount payable by BSES to TEC.

These issues are likely to come up in the BSES annual general meeting slated for August 24. BSES director (technical) SK Dua, in a communication to MSEB, has also pointed out that MSEB cannot lay down a condition regarding payment of standby charges for giving NOC under section 44 for the Saphale project. "A power procurement price would be regulated by MERC, and as such, we submit that imposing this condition may not be in the jurisdiction of MSEB. Our suggestion is that this should not become a part of the conditions for grant of NOC," he said.

Dua's submission deserves special siginificance especially when the MSEB has taken a firm stand of "either pay up or pack up" for giving clearance under secion 44 for BSES' Saphale power project. MSEB has asked BSES pay charges for 275 MVA additional standby demand at the rate it (read MSEB) would charge to TEC from March 1, 1999. At present, rate is Rs 550 per KVA/M applicable till July 31 and it would be revised to Rs 600/KVA/M from August 1 this year.

Similarly, TEC chairman Ratan Tata has recently ruled out the possibility of any compromise with BSES over the payment of standby charges. In fact, Tata who hoped the state government will take a right step in this regard, has also hinted at legal action for the recovery of these charges.However, Dua has reiterated that the demand charges for standby supply is essentially a matter between TEC and BSES. "In this context, our commercial arrangement with TEC are governed by a bilateral agreement and on the issue of amendment to this agreement, we are in correspondence with the state government," he added.

Moreover, Dua has said that a bilateral agreement between MSEB and TEC exists for the payment of standby charges. A similar bilateral agreement is also there between TEC and BSES, he added.Commenting on the MSEB's condition on entering into a tripartite agreement between MSEB, BSES and TEC for payment of standby charges, Dua said that any commercial arrangement has to be mutually acceptable and would need modifications including in the principles thereof in response to changes in circumstances.

MSEB had also stated that the state government would carry out suitable modifications in license issued to BSES, incorporating the principles of the commercial arrangement. Responding to this condition, Dua said that as such, licence may stipulate only enabling provision for such a commercial arrangement and thus provide for flexibility on this account.

On MSEB's condition to sell power generated from the Saphale power project in the license area, Dua said that the present arrangement of supply being sourced from TEC would continue under the existing laws. However, he called for appropriate changes in the existing legislation, thereby sale of power only in licence area should not form part of the licence.

"In view of the emerging scenario in the legal framework of power sector, sale of power outside, if any, will be subjected to relevant laws and policies, Dua said.