Mantralaya sources told The Financial Express that Reliance Patalganga, which will set up a Rs 1,411-crore project, will be entitled to sell power to high-tension consumers or any other creditworthy consumers acceptable to the company or its lenders within Maharashtra or outside.

Going by the cabinet note, RPPPL may identify third party consumers and the revenue collected from such consumers after deducting all expenses will be at least equal to the revenues required as per the power purchase agreement (PPA).

MSEB will be deemed to have no objection to such sales and will use all reasonable endeavours to facilitate RPPPL's arrangements with such third party consumers in order to give full effect to the spirit andintent of RPPPL's agreement with such consumers. RPPPL will also provide discount in tariff to third party consumers based on mutual agreement between the parties. The revenue collected by the company from third party consumers will include both demand charges and energy charges. "Third party consumers shall not be subject to or include in any security or any escrow arrangement with any other independent power producer in Maharashtra," sources said.

In the event RPPPL enters into an agreement to provide capacity or energy to such third party consumers, MSEB will supply the required energy from MSEB system without charging or accounting for any wheeling charges and transmission losses.

Moreover, RPPL will be entitled to supply energy to consumers within the distribution area (Vashi, Pen, Mumbai suburbs, Bhandup, Pune, Nashik, Thane and Kalyan). These areas will have an average tariff collection rate of at least 75 per cent of the tariff per unit from the power station.

In order to implement thedistribution scheme, MSEB will do all such acts (including the provision of consents and clearances) or execute and deliver all such instruments, consent, clearances and assurances necessary for carrying out or giving full effect to the distribution scheme, the note said.

In a related development, the state cabinet has upheld RPPL's stand that the project would not be viable if tariff was calculated on the gross capacity of 447 mw and not the net capacity of 410 mw. "The Government felt that it was necessary to keep the project alive," the sources said.

The configuration of the turbines amounting to 447 mw was required to maintain constant supply of 410 mw and RPPL's net installed capacity would be 410 mw, making the allowance of 3 per cent for the use of the power for auxiliary consumption under the project itself. The company will have to constantly supply power of 398 mw under varying circumstances and situations.

MSEB, which shares RPPL's views, said that though the gross installed capacity washigher (447 mw), the net installed capacity can be arrived at by carrying out actual capacity tests at the site, subject to rigorous conditions which should determine the capacity to be considered for tariff calculation.

Insight

A step in the right direction
The agreement with RPPPL is a step in the right direction. Allowing IPPs to sell power to high-tension clients is the way to go instead of providing escrow or state guarantee. The demand-supply equation should be left to private players and the role of the SEB should be restricted to a facilitator. To consumers what matters is the quality of power and tariff and not who supplies power. Third party sale is already allowed in Gujarat and AP and the move by Maharashtra is an excellent development. The area given to RPPPL for supply in case of default by MSEB will ensure that dues are paid up on time as otherwise MSEB will be left mainly with a heavily subsidised client base.