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High-voltage war likely for Bombay suburban power market

Prasanna D Zore in Bombay

Tata Electric Company managing director Homi Sethna's decision to supply power to suburban areas in Bombay -- till now the monopoly of the Bombay Suburban Electric Supply -- is likely to spark a war between the two utilities.

While TEC produces, supplies and sells power to BSES at a fixed cost, BSES has a monopoly status as a power supplier to suburban areas in Bombay.

Sethna told TEC's annual general meeting that the company would henceforth supply power to suburban areas barring the Bhandup-Mukund belt serviced by BSES.

Suburban consumers have become restive as the tariff -- rate per unit -- charged by BSES is much higher than those paid by consumers from the Colaba-Sion-Mahim stretch in the urban limits. It is this section of consumers in suburban Bombay that Sethna might try to target.

Citing TEC's commitment to social justice, Sethna said that 25 per cent of the total power supplied to BSES and BEST undertakings is at a subsidised rate of Rs 1.29 per unit. Under such circumstances, it is for consumers to decide whether they would directly take advantage of the subsidy or depend on some parallel arrangement to avail of it.

He hoped that considering the increasing industrialisation and population in Bombay, it would prove beneficial to the consumers if TEC got a licence to supply power to suburban consumers. Sethna pleaded that people should trust TEC as it has been supplying power for the past 85 years and has expanded its operations as far away as in Pune.

Nevertheless, TEC has already made a foray into the suburban power market as it supplies power to the Bandra-Kurla complex in the suburban limits, though, technically, the land is reclaimed from the sea to develop the project. The revenue TEC generates from this business is substantial.

This development is like rubbing salt into BSES' wounds as it can hardly match the competitive rates offered by BEST because both the undertakings had to target residential areas for offtake of power. Moreover, TEC supplying power to the business users of the Bandra-Kurla complex has further peeved BSES.

In these circumstances, both the BSES and TEC are chalking out strategies. While the former wants to retain its monopoly over suburban power consumers, the latter is seeking to break it.