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Rediff.com  » Business » Tata Power offers to take over R-Infra's Mumbai network

Tata Power offers to take over R-Infra's Mumbai network

April 23, 2010 16:16 IST

Tata Power, one of the power suppliers in Mumbai, has offered to take over the distribution business of Reliance Infrastructure - a development that comes on the heels of a power purchase dispute between the two.

"When you takeover a network, there are no wheeling charges to be borne by the customers and this will be of benefit to them," Tata Power's Executive Director S Ramakrishnan said on Friday.

The company has already put forward this proposal before the Maharashtra Government, he said.

The two companies are engaged in a row over power purchase. R-Infra has been purchasing 500 MW of electricity from Tata Power, which has threatened to suspend supply over R-Infra's refusal to sign a Power Purchase Agreement.

Tata Power said it was willing to take over the 2.8-lakh customers of R-Infra along with its network. "A part of the R-Infra network could also be taken over by BEST (another distribution utility)," Ramakrishnan said. Tata Power had earlier got a favourable ruling from the Supreme Court that it need not supply power to R-Infra without a PPA, following which it had decided to stop supply from April one.

However, after the state government's intervention, it agreed to continue supply till April 30. Ramakrishnan said that the company would evaluate its options after April 30.

"We will supply power to R-Infra till April 30 but after that we will consider all options available to us including the judicial route. It is unfair to ask us to supply to R-Infra," Ramakrishnan said.

R-Infra CEO and Whole-Time Director Lalit Jalan had said earlier this week that Tata Power plans "to sell a large part of the capacity outside Mumbai. This will lead to supernormal profits (around Rs 1,200 crore) to TPC."

Debunking reports that Tata Power would sell the power outside the state for a huge profit, Ramakrishnan said that the company has already entered into a PPA with both BEST and its own distribution arm for 100 MW and 160 MW, respectively.

"This power would be for Mumbai city," he said. The remaining 200 MW would also be switched over to its distribution arm as its load picks up, he said. Pointing out that this arrangement would benefit its consumers, Ramakrishnan said that "if we had signed a PPA with our distribution arm for the whole 350 MW, then consumers would have had to pay a higher fixed charge. Now we have the flexibility to shift the 200 MW to our distribution arm as and when needed."

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