However, industry sources said that National Thermal Power Corporation (NTPC), Jindals were believed to be among the 28 bidders for the supply of power at competitive rates compared to Tata Power Company (TPC). These bidders have responded to RELs advertisement appeared on August 27 in a section of press.
Mr Ambani told analysts: REL, in a six-month time frame subject to open access of transmission lines being allowed by Maharashtra Electricity Regulatory Commission (MERC), is likely to stop buying power from TPC unless the tariff is revised downwards. Currently, REL, which has its own generation of 500 mw, daily purchases around 600 mw from TPC at a per unit tariff of Rs 3.25.
REL sources, when contacted, declined to divulge names of the bidders on the grounds of confidentiality. According to analysts, REL, which is involved in legal dispute with TPC over the payment of standby charges, wants to get rid of this arrangement especially in view of various provisions of EA 2003. In FY-03, units sold to REL accounted for 32.93 per cent of units sold by TPC in the license area and 26.3 per cent of total units sold.
For the first quarter of 03-04, figures are 34.03 per cent and 26.8 per cent respectively. Analysts said that TPC was hindered by its high-fuel cost in the license area because of its over dependence on liquid fuel and unless it absorbed part of the cost itself or shift faster to imported coal, it would lose its largest single client. According to analysts, in view of standby charges, TPC in any case is expected to lose REL as a customer which will be a bad news for TPC.
Mr Ambani termed RELs strategy summed up its business strategy as from well-head to wall-socket. The pillars of REL growth strategy comprises generation, transmission, distribution and trading. The REL chairman opined that bundled services would maximise customer satisfaction. Mr Ambani said RELs future generation strategy would be directed towards fulfilment of own needs for power.
It will invest in generation projects only if targeted hurdle rates are achievable. Reliances large reserves of over 14 trillion cubic feet are capable of generating 15,000 mw of power -an astounding 25 per cent of the countrys total operating capacity, Mr Ambani added.
REL has already set up its arm, Reliance Energy Transmission (RET) to pursue opportunities through opening up of the transmission sector. REL will contribute to enhanced reliability in supply of power, he told analysts. On opportunities in distribution business, Mr Ambani said that REL was identifying distribution areas to expand customer base across the country.