As per the Kukde committee recommendation, BSES, TEC and the Maharashtra State Electricity Board (MSEB) have to sustain existing commercial arrangement and equilibrium. The new projects are to be considered only for growth in demand, said TEC director Adi Engineer. This included both TEC and BSES' proposed 450 mw and 495 mw power projects, he said.

The committee also said both companies should set up these projects in phases, depending on the demand in their distribution areas. BSES capacity addition at this state will also affect the TEC's business as a licensee, officials said.

Since BSES, apart form its own generation, buys electricity from TEC to meet its consumer demand, the latter fears that with the fresh capacity in placethis purchase will be reduced or may even be stopped.

BSES buys around 2700 million units from TEC every year. This may not be required if BSES enhances generation at this juncture. Demand for more power in future depends primarily on the the industrial growth, Engineer said.

BSES also has a stand-by arrangement with the TEC for a 275 mva which means that that TEC has to provide this quantum to BSES whenever it requires.

Against this background, TEC will not have any option but to back down its generation as its area of distribution is limited. Or it will have to depend on the MSEB to purchase its surplus power. This option has a limited scope as the board has committed to purchase a huge capacity from the Dabhol Power Company.

TEC's objection to the capacity addition by the BSES hinges on the recommendations made by the Kukde committee which had representatives from BSES, TEC, MSEB and the state government. The committee states that there should be full utilisation of the existing capacities beforenew addition, said Engineer, adding that TEC still has a surplus of power both during peak and non-peak hours. The company has already pointed out this to the government.

According to the BSES officials, the load demand in its area is growing at the rate of 6-7 per cent every year and the 495 mw plant is conceived to cater to the additional load. The project will be implemented in phases.

As the gestation period of a power plant is over three years one has to plan ahead of time. There is always a possibility and risk of some access capacity but in this business one can not expect the industries to grow without availability of power. Electricity is a prerequisite of growth in both industrial and domestic load, said BSES officials.

Meanwhile, TEC is exploring other areas to grow its business. This include opportunities not only in power generation but also in power transmission and distribution. The company is undertaking captive generation for other industries. Besides it is bidding for independent powerprojects.

TEC was also offered a 51 per cent equity stake in the Central Electricity Supply Company, the power distribution company in Orissa but it has set certain conditions for taking equity in the venture.

It is learnt that Gridco, which invited the bids for privatisation, is not willing to accept these condition and has already initiated talks with other buyers. But the power Mumbai-based power utility is also in the race to undertake distribution at Kanpur.