Tata Power asked not to apply differential pricing

A Maharashtra government-appointed committee has asked Tata Power not to adopt differential pricing but supply excess power at the regulated price to Reliance Infrastructure.

The committee, in its report submitted to the government on April 28, made it clear that interest of Mumbai consumers needs to be protected, and thus power generated in Mumbai would have to be sold within Mumbai.

The high-level committee, appointed to sort out the dispute between Tata Power and Reliance Infrastructure over power purchase, is headed by the state chief secretary.

Tata Power generates 1,877 Mw, while Reliance Infrastructure has an installed capacity of 500 Mw. Reliance Infrastructure also procures 500 Mw from Tata Power and nearly 300 -500 Mw from the open market. There is no power purchase agreement between Tata Power and Reliance Infrastructure.

The committee has suggested that Tata Power can sell an excess power of 200 -250 Mw to Reliance Infrastructure at the regulated price of Rs 4.40 per unit and not at the market price of Rs 7 per unit or a negotiated price of Rs 5.90.

Tata Power, which has offered to take over the distribution business of Reliance Infrastructure, already entered into power purchase agreement with BEST (BrihanMumbai Electric Supply & Transport) for 100 Mw and about 160 Mw to its own distribution company.

Tata Power has already expressed its inability to sell 200-250 Mw to Reliance Infrastructure on the ground that it would need that power to meet its future requirement in the wake of rising consumer base. Sources at Tata Power and Reliance Infrastructure preferred not to comment till they examined the committee recommendations.

"Tata Power can sell 200-250 Mw to Reliance Power for a time period to be finalised by the two at the price of Rs 4.40 per unit fixed by the Maharashtra Electricity Regulatory Commission. The committee wants Tata Power not to lose their earnings, but at the same time can make reasonable profit," a state government official, privy to the committee proceedings, told Business Standard.

The official said the committee was of the view that Tata Power could not adopt differential pricing for Reliance Power.

The official said the state government had asked Tata Power to continue the supply of 500 Mw to Reliance Infrastructure till further orders. "If Tata Power wants to defy the government order, it can do so at its own cost, as the government is more concerned about the interest of the Mumbai consumers," the official noted.

In case of Reliance Infrastructure, the committee has asked the company to take necessary measures expeditiously to meet its current and future power requirement in order to reduce its dependence on Tata Power alone.