Tata Power supply to light up Rel Infra till Mar 2010

Written by fe Bureau | Mumbai | Updated: Jun 27 2009, 02:25am hrs
In a significant development, Tata Power has communicated to Reliance Infrastrucure (Rel Infra) that it would continue to supply 500mw till March 2010, but after that that Reliance Infra needs to make its own arrangement. Tata Power's move is crucial as it will enter into retail power supply to give a tough competition to RInfra in view of the recent Apex Court order. Rlnfra, which has 500mw generation capacity at Dahanu, has a consumer base of over 22 lakh, mainly in Mumbai suburbs.

Tata Power officials on Thursday said the Supreme Court ruled that Rel Infra had no legal right to insist on getting power supply from Tata Power's generation facility for reasons inter alia that there was never any power purchase agreement (PPA) executed between the two companies, and further that Tata Power could not be compelled by the regulatory authorities to supply electricity to other distribution licensees, such supplies being based only on consensual PPAs.

The company noted that under the Electricity Act of 2003, it is mandatory for a distribution licensee to sign a PPA with a generation company to protect the interest of consumers and ensure power availability in the future. Rel Infra sources were not available for comment.

Tata Power is committed to supply 800mw to BEST and 477mw to its own distribution system. Further, the Apex Court vindicated its position that it has the licence to supply to all consumers in Mumbai falling within its licensed area.

Tata Power considers it commercially inexpedient to enter into a contractual arrangement with RInfra, given the track record, which is apparent inter-alia from the continuous spate of litigation indulged by it, be it in connection with the payment for energy charges, take or pay commitment by RInfra, standby arrangements provided by Tata Power, the challenge to our licences and even the recent litigation in respect of the Power Purchase Agreements signed with BEST and Tata Power (Distribution). Needless to add that it is not on account of these alone that we have decided not to continue with the supply of power to Rel Infra, but it is one of the commercial factors that have been taken into account. Thus, keeping in view a host of reasons, an important reason being its own projected needs of power, Tata Power has taken a decision that it would not be in its interest to enter into any contractual arrangement with RInfra for supply of power from its generation facilities, the company said.