SC Verdict May Help BSES Save Rs 680 Cr

New Delhi, November 4 | Updated: Nov 5 2003, 05:30am hrs
BSES Ltd (now known as Reliance Energy) could save nearly Rs 680 crore in the wake of the Supreme Court ruling on payment of charges for standby facilities of 275 MVA availed by it, from Tata Power Company (TPC).

TPC, in turn, has a standby arrangement with Maharashtra State Electricity Board (MSEB) for 550 MVA.

BSES and TPC have been fighting a legal battle for over three years ever since the latter issued a notice to BSES for increase in payment of standby charges, following MSEBs decision to hike standby charges for the standby facility availed by TPC. Sources said the potential liability of BSES on account of claims made by TPC could have been as high as Rs 869 crore which, according to industry sources, could now come down to less than Rs 200 crore. The SC had ruled recently that the authority to fix power tariffs was vested with state electricity regulatory commissions (SERC) and neither the state governments nor the power companies could change the tariffs without the approval of the regulator. This ruling automatically set aside the Maharashtra government order of March 2000, in which BSES and TPC were asked to share the standby charges in equal ratio (Rs 198 crore each per annum). Sources said that TPCs claims on BSES for the period April 1999 to September 2003 amounts to nearly Rs 870 crore. Against this claim, BSES has paid Rs 189 crore towards the agreed charge and deposited Rs 351 crore towards enhanced charge. The ball is now in the court of the Maharashtra Electricity Regulatory Commission (MERC), which has been asked by SC to give a decision on the matter preferably within three months.